The Politics of Retirement in Britain, 1878-1948

The Politics of Retirement in Britain, 1878-1948

Using much original research, John Macnicol has succeeded in producing a detailed and thorough analysis of the evolution of the most important aspect of the British welfare state - the debate on retirement and state pensions between 1878 and 1948. His study begins with the late nineteenth-century debate over the 'worn-out' older worker, and the resultant campaign for state old age pensions. Important new insights are offered into the role of key individuals such as William Blackley, Joseph Chamberlain and Charles Booth, and interest groups such as the Charity Organisation Society, the friendly societies, the labour movement and pensioners' organisations. Subsequent sections examine the shift to contributory pensions as part of the 'New Conservatism' of the 1920s, the debate on retirement pensions in the following decade, the treatment of old age poverty by the inter-war social surveys, and the concern over the 'burden' of an ageing population in the late 1930s. The book concludes with a radical new interpretation of the 'Beveridge revolution' of the 1940s. JOHN MACNICOL is Reader in Social Policy at Royal Holloway, University of London.

The Politics of Retirement in Britain, 1878-1948 John Macnicol

CAMBRIDGE UNIVERSITY PRESS

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The Edinburgh Building, Cambridge, CB2 2RU, United Kingdom http://www.cup.cam.ac.uk 40 West 20th Street, New York, NY 10011-3211, USA http://www.cup.org 10 Stamford Road, Oakleigh, Melbourne 3166, Australia © John Macnicol 1998 This book is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 1998 Printed in the United Kingdom at the University Press, Cambridge Typeset in Plantin 10/12 pt [CE] A catalogue recordfor this book is available from the British Library ISBN 0 521 62273 5 hardback

Contents

List of tables Acknowledgements

Parti The campaign for old age pensions 1 Introduction

page vii viii

1 3

2 The nineteenth-century background

18

3 Blackley, Chamberlain and Booth

60

4 The opposition of the Charity Organisation Society

85

5 The attitude of the friendly societies

112

6 The labour movement and the state

137

Part II Contributory pensions

165

7 The First World War and the 1919 Ryland Adkins Committee

167

8 From 'all-in' insurance to contributory pensions

181

9 Neville Chamberlain, the 'New Conservatism' and the 1925 Act

200

Part III The debate on retirement pensions

225

10 Labour and retirement pensions in the late 1920s

227

11 PEP and retirement pensions in the 1930s: an ageing population

244

12 Poverty surveys

265

vi

Contents

Part IV The 'Beveridge revolution'

285

13 The pensions crisis of the late 1930s

287

14 The Treasury enquiry and the 1940 Act

325

15 The origins and working of the Beveridge Committee

347

16 After the Beveridge Report, 1942-1948

385

17 Conclusion

400

Index

411

Tables

2.1 Proportion of males aged 65+ defined as 'economically active' page 23 2.2 Poor Law dependency by age, England and Wales 39 2.3 Rates of pauperism by age, England and Wales 40 11.1 Numbers of elderly workers compared with unemployed, by industries (November 1933) 252 12.1 Earnings of a random sample of 3,939 adult males according to age, Liverpool 270 12.2 Earnings of all persons aged 60-64 and of old age pensioners, Liverpool 270 12.3 Percentage of persons employed in each age group, Liverpool 271 12.4 Age and poverty, showing the proportion of persons in each age group below standard 275 12.5 Inactive persons over 65 years: weekly household budget, excluding rent 280 12.6 Source of income of persons aged 60-64 and of old age pensioners, Liverpool 283 15.1 Estimated expenditure in 1945 (£ millions) 382 383 15.2 Pension values, 1914-1946

Acknowledgements

This book started life more than ten years ago, as a project funded by the Social Science Research Council (now the Economic and Social Research Council). I apologise for its length: it just grew, as more and more themes revealed themselves; and it had to be fitted in with many other research, teaching and administrative commitments. My first and overwhelming debt of gratitude is to Andrew Blaikie, Research Officer on that original project and now in the Department of Sociology at Aberdeen University, whose erudition, wisdom and scholarship have been a constant source of stimulation to me. Andrew wrote some excellent working papers for the project (from which I was able to develop ideas, especially in chapter 12), collaborated with me on a number of articles and conference presentations, shared with me a memorable three-week academic visit to the USA, and has been a true friend. Professor Margot Jefferys co-ordinated the original SSRC initiative, of which this project was one of several. I am most grateful to her for her encouragement in the early stages. The SSRC initiative was also an excellent opportunity to meet others working in the field, whose company was most stimulating. A very large number of people have helped me in a multitude of ways, among whom I should particularly like to thank Andrew Achenbaum, Vern Bengtson, Alan Gordon, Dulcie Groves, Peter Hennock, Katherine Holden, Helen Jones (who provided excellent research assistance at a very early stage), Ray Lee, Rodney Lowe, Susan Pedersen, Chris Phillipson, Sara E. Rix, Brian Sheldon, Harold Smith, Humphrey Southall and Noel Whiteside. My colleagues in the Department of Social Policy and Social Science at Royal Holloway have given me many ideas, and have studiously avoided asking 'How's the book?' any more than was absolutely necessary. I owe a very special debt of gratitude to Alan Deacon and Hilary Land, both of whom have been very kind and encouraging. I should like to thank the following academic libraries: the British viii

Acknowledgements

ix

Library of Political and Economic Science (particular thanks to Dr Angela Raspin); the University of London Senate House Library; Edinburgh University Library; the University of Birmingham Library (thanks to Dr B. S. Benedikz and Miss C. L. Penney for permission to use the Joseph and Neville Chamberlain Papers). Transcripts of Crown Copyright material in the Public Record Office appear by permission of the Controller of Her Majesty's Stationery Office. Lastly, my sincere thanks to my editor at Cambridge University Press, Richard Fisher, for his patience and professionalism, and whose gentle advice and encouragement has been much appreciated.

Parti

The campaign for old age pensions

Introduction

By the late nineteenth century, many thoughtful political commentators in Britain were viewing the prospect of mass democracy with alarm. Nineteenth-century capitalism was based upon a social organisation in which the bulk of private property and wealth ownership was concentrated in the hands of a tiny social elite, with the vast majority of the population dependent, either directly or indirectly, upon precarious waged labour. According to a political logic held by many across the political spectrum, the full enfranchisement of the working class would inevitably result in the capitalist class being quickly stripped of its wealth and power by entirely constitutional, parliamentary means. In short, capitalism and mass democracy seemed logically irreconcilable.1 Yet the political cataclysm did not happen. By stages, democratic voting rights were extended until universal adult male suffrage and partial adult female suffrage were achieved in 1918, the process being completed in 1928. To be sure, there were several nervous moments along this route - notably, in the period 1918-22 and when the first minority Labour government was formed in January 1924. But capitalism survived, and the unequal ownership of private property emerged unscathed. Even in the 'devil's decade' of the 1930s, when several European nations had become fascist dictatorships, the stability of its democratic institutions allowed Britain to weather the economic recession with its political order largely intact. By the post-1945 period in world history capitalism and mass democracy had become synonymous. The process of transition to a liberal capitalist democracy in Britain has been the object of intense scrutiny by political theorists, since it has raised every question that is central to democratic theory: the limitations on change set by the complex processes of competitive party democracy; the power of the state to accommodate and neutralise 'from below' political challenges by processes of incorporation; the agenda-setting by those key institutions that disseminate information, and thus influence 1

For an exploration of this theme, see Claus Offe, 'Competitive Party Democracy and the Keynesian Welfare State', in Offe, Contradictions of the Welfare State (1984), ch. 8.

4

The campaign for old age pensions

cultural formation; the distinction between 'objective' and 'subjective' economic interests; and the legitimation of authority by concessionary processes, notably state welfare. Broadly speaking, liberal political theorists are relatively untroubled by the capitalism/democracy conundrum. The two most intriguing questions of political theory - why is the unequal distribution of private property tolerated? and why do citizens consent to obey authority? present no difficulty because mass political consciousness, or 'public opinion', is seen as essentially unproblematic. Since the subjective, expressed wishes of citizens are seen as 'real', the answer to both questions is, therefore, simple: because we wish things to be so. Liberal political theory offers the beguilingly attractive explanation that mass democracy has moderated free market capitalism to a degree acceptable to most citizens; any further erosion of inequalities would be unacceptable, violating too many individual and collective rights. In the liberaldemocratic analysis, state welfare has been a key factor in the reconciliation process, offering citizens a basic minimum guaranteed standard of living. Most famously expressed in T. H. Marshall's notion of a trinity of rights (civil, political and social), the welfare state has acted as a bridge between the vulnerable citizen and the excesses of free market capitalism.2 The neo-Marxist tradition of welfare analysis also views the challenge of mass democracy as potentially cataclysmic for capitalism. Where it differs sharply from the liberal analysis is in its contention that mass democracy has done little to effect a significant change in relative inequalities. Instead, it is argued, competitive party democracy has contained mass political aspirations, and largely neutralised them. The expressed wishes of citizens are highly problematic, being so subject to choice-distortion processes that they cannot be accepted merely at face value. The twentieth century may have offered tiny morsels, in the form of consumer goods and insecure property ownership, but the major social inequalities have remained very wide. State welfare has thus been a key instrument by which capitalism and mass democracy have been reconciled. The growth of state dependency Simultaneously with the growing challenge of mass democracy - and thus inextricably linked to it - there was occurring a significant shift in 2

T. H. Marshall, 'Citizenship and Social Class', in Marshall, Sociology at the Crossroads and Other Essays (1963), pp. 104-22; and 'Value Problems of Welfare-Capitalism', in Marshall, The Right to Welfare and Other Essays (1981), pp. 104-22.

Introduction

5

the process of capitalist development, such as to increase - slowly but inexorably - the dependency of citizens upon sources of income other than waged labour. As will be argued later in this study, over the past two centuries four distinct but inter-related labour market trends (themselves products of technological innovation) have had profound effects upon human behaviour, social relations and cultural formation, establishing the contextual setting in which citizens have negotiated their everyday lives: the exit of children from the industrial labour force, and the progressively longer periods of time spent by them in full-time education; the fall in the formal labour force participation rates of married women from the early nineteenth century to the 1920s and 1930s, then their steady rise after the Second World War; the gradual shake-out of older workers (predominantly male) from the labour force; and, beginning at the end of the twentieth century, the de-industrialisation of young, unskilled males. As industrial production became noticeably more technology-intensive at the end of the nineteenth century, and thus the labour market 'tightened up', so the distinction between 'work' and 'dependency' became clearer. In the nineteenth-century labour market, many individuals possessed an ambiguous status, drifting between what we now think of as notionally precise categories like 'employed', 'unemployed', 'retired', 'infirm' or 'part-time'. By the twentieth century, a clearer dividing line was becoming established between those engaged in the formal labour market and those dependent upon the waged income of a breadwinner. One aspect of this was the development of the idea of a career, terminated by a fixed age of retirement. The social and political elite of late nineteenth-century and early twentieth-century capitalist society thus found itself facing two interlinked challenges: mass democracy threatened to end for ever its economic and political dominance; and the growth of social dependency created a demand for expensive social welfare policies, funded by punitive levels of redistributive taxation, to support those who were becoming marginalised from waged labour. Nowhere were these two social forces more evident than in the campaign for old age pensions. By the early twentieth century, state pensions had emerged as the centrepiece of a powerful socialist challenge, and were to remain so thereafter, even if the determination behind that challenge gradually weakened with every passing decade. The story of how that challenge was mounted, and how it was countered and eventually defeated by the institutions of the state, is the central theme of this book. The saga of pensions thus provides a clear example of how the broader challenge of mass democracy was contained. But the

6

The campaign for old age pensions

enormous difficulty faced by those within government whose task it was to accommodate this challenge was that long-run labour market trends were bringing about an inexorable decrease in the labour force participation rates of older males, just as demographic trends were increasing both the number and proportion of old people in the population. Less and less able to earn a living through formal work, the growing numbers of old people formed an increasing population of'dependants' at the top end of the population age structure. It was impossible not to provide state support for them. As jobs for older workers slowly disappeared, so there emerged a variety of arguments in favour of state pensions, resting on a logic which was unassailable, but whose contradictory nature summed up the central political dilemma of state welfare in a capitalist society. On the one hand were several broadly conservative arguments: pensions were needed to assist the continued shake-out of older workers, and thus improve industrial efficiency. If provided by the state (and especially if funded by contributions from working people themselves) employers could be relieved of the cost of providing them: it is significant that several leading employers were very supportive of the 1908 Old Age Pensions Act.3 Pensions also performed the important secondary functions of enhancing political legitimacy and relieving working-aged families of the expensive burden of supporting aged relatives, thus indirectly assisting the reproduction of labour. Yet, on the other hand, state pensions had the potential to become enormously expensive, as demographic and labour-market pressures created a rising tide of retirees. If funded by taxation levied principally on the rich, they could be highly redistributive. By removing older workers, the labour market would also be 'tightened up' and the bargaining power of younger workers enhanced, thus boosting the power of trade unions. Old age pensions thus quickly became the centrepiece of a rapaciously redistributive socialism that had to be resisted by the state at all costs. Steering a way between the Scylla and Charybdis of these two opposed forces was the central dilemma of the 'politics of retirement' in the period 1878-1948. However, before we move on in the next chapter to examine the late nineteenth-century origins of the campaign for old age pensions, we must consider the emergence of old age as a social issue.

3

Pat Thane, 'Non-Contributory Versus Insurance Pensions 1878-1908', in Thane (ed.), The Origins of British Social Policy (1978), pp. 101-3.

Introduction

7

The ageing of British society In all advanced industrial societies, the unfolding of the twentieth century witnessed profound changes in the status of old people. For the first time in their histories, such societies experienced substantial and ever-growing numbers of their elderly citizens reaching the seventh, eighth and even ninth decades of the life course. The ageing of industrial societies has had social, economic and political consequences of enormous importance. This demographic transformation of British society was unprecedented. In 1841 there were only 700,000 persons aged 65 or over (65+) in Britain, equivalent to just over 4 per cent of the total population; by 1901 the number had more than doubled, to 1,500,000 but, because of overall population growth, this still represented only 5 per cent of the total population; by 1981, however, Britain had 8,500,000 citizens aged 65+, equivalent to 15 per cent of the population. What caused this demographic shift? The most important factor in the ageing of the British population has been the fall in the birth-rate from the late 1870s to the early 1940s, determining the size of each successive birth cohort and squeezing in the base of the 'population pyramid'. By contrast, the post-Second World War high birth-rate 'baby boom' (lasting until the mid-1960s) has slowed the rate at which the British population has 'aged' by increasing the proportion of workingaged adults. From 1981 to 2011 the projected proportion of the 65+ population will rise little - from 15.0 per cent to 16.1 per cent - because the present and immediate-future generation of retirees are those born in the low birth-rate inter-war period. However, after 2011, and certainly after 2021, the proportion of people aged 65+ will rise significantly, as the 'baby boomers' move into retirement, so that they will reach a predicted 21.0 per cent in 2041. Conversely, by the time the generations born after the mid-1960s start to retire, the perceived problem will be diminishing.4 The second factor causing the ageing of the British population has been the decline in mortality at all ages, but especially in childhood, permitting more babies to survive to adulthood and more adults to survive to old age. Contrary to popular belief, longevity in middle age and old age has been the least important causal factor. Falling infant mortality has dramatically improved life expectancy at births but life expectancy in adulthood has not shown nearly such a spectacular 4

For useful summaries of the demographic factors, see: Christina Victor, Old Age in Modern Society (1987), ch. 6; Paul Johnson and Jane Falkingham, Ageing and Economic Welfare (1992), ch. 2.

8

The campaign for old age pensions

improvement. In 1901, the average 65-year-old man could expect to live another 10.8 years, and a woman another 12.0; by 1991, these had only increased to another 14.0 years (man) and 17.8 years (woman). Thus projections which argue that, in the future, substantial numbers in the population of advanced industrial societies will survive to be c. 120 years of age are erroneous, since they are based upon life expectancy at birth. If, instead, the correct measure of life expectancy in adult years is used, then the 'success scenario' changes to one in which the overwhelming majority of citizens will survive until their mid-eighties, enjoying a healthy old age, and will then die suddenly after a 'compression of morbidity' occurs with the 'rectangularisation' of the survival curve. Paradoxically, these dramatic improvements in the survival rates, health status, and thus working capacity of older adults have been accompanied by the spread of retirement. In the 1890s, about twothirds of males aged 65+ were recorded as 'gainfully occupied'; the midpoint of 50 per cent was reached in the late 1920s; by the early 1950s, this proportion had fallen to one-third; and by the 1980s, it was less than 10 per cent (about half of whom were working part-time). Hence the rising population of old people became steadily fitter and healthier, and thus more able to participate in the labour market. Yet, at the same time, they were increasingly denied such participation, and were marginalised into economic inactivity. How is this paradox to be explained? Most explanations have been based to some extent upon a broad 'modernisation' model, in which the ageing of populations is seen as part of the transition to modernity in late industrial societies. Pre-industrial societies, operating from a predominantly rural economic base, will tend to have high birth-rates, high death-rates and an aged population that is cared for within the context of the small community or the extended family. With the coming of industrialisation, death-rates fall as living standards improve, until such an economy reaches maturity, at which point birth-rates also fall. (Such a point was reached by Britain in the 1880s.) The effect of this demographic transition is - after a time-lag - to increase the proportion of old people in the population because smaller cohorts of young will skew the population age structure upwards. At the same time, the industrialisation process performs several interactive functions. It places increasing emphasis on technological innovation in the production process, and thus certain groups of workers (notably, children and the aged) are displaced from the industrial labour force. In a more economically competitive era, the dictates of 'scientific' industrial management (manifested in 'Taylorist' or 'Fordist' practices) also require that such marginal labour be shed. Industrialisation creates the wealth to fund a state pension scheme. It

Introduction

9

produces an organised labour movement that demands state-subsidised retirement as an end-of-lifetime reward for service at the workplace, and as a means of supporting those older workers marginalised by the changing structure of capitalism. As part of the 'information explosion' and bureaucratic sophistication in such societies (for example, in social surveys or census data), age-based social divisions become more common and age discrimination grows.5 Like all broadly functionalist explanations, the modernisation model lapses into tautology and thus has serious deficiencies. It has little to say on how the distribution of power will affect prevailing social constructions of old age, and it does not explore the ways in which the interaction of class, race and gender produces marked inequalities in the 'old age experience'.6 Its greatest deficiency is that it fails to explore the question of agency. Explanations of the spread of retirement have thus had to push the 'modernisation' account a stage further. In doing so, historical accounts of retirement have tended to offer two kinds of explanation, either in opposition or in some kind of combination. First, there are those that prefer to stress a decrease in the supply of older workers, as a result of collective consumer choice. Growing prosperity in the twentieth century has meant that citizens have been progressively better equipped to fund their own retirement, either directly through private pensions, or indirectly, via the crisk-pooling' principle, through the collective protection of a state pension scheme. Advanced industrial economies can afford to respond sympathetically to the expressed desires of citizens for a package of work-related benefits a shorter working week, paid holidays, minimum standards at the workplace, and an employer-funded or state-funded period of leisure at the end of the life course. Hence Leslie Hannah has argued that ca central factor' in explaining the spread of retirement has been 'the increased capacity to finance retirement and the reduced dependence of the old on income from employment'. Hannah concludes that: 'Voluntary retirement is, in a sense, a luxury good whose incidence would be expected to grow in a hundred year period in which general living standards have perhaps tripled.'7 A version of this model also sees state 5

6

7

See, for example, Carole Haber, Beyond Sixty-Five: The Dilemma of Old Age in America's Past (1983), p. 127 For an interesting discussion of 'modernisation' models as applied to old age, see W. Andrew Achenbaum, Shades of Gray: Old Age, American Values and Federal Policies Since 7920(1983), pp. 6-17, 182-9. Leslie Hannah, Inventing Retirement: The Development of Occupational Pensions in Britain (1986), p. 124. For a similar view, see also: Paul Johnson, 'The Structured Dependency of the Elderly: A Critical Note', in Margot Jefferys (ed.), Growing Old in the Twentieth Century (1989), pp. 62-72.

10

The campaign for old age pensions

pension schemes - introduced by popular pressure - as an important causal factor: such is the central theme of Carole Haber and Brian Gratton's recent study on the USA, in which the 1935 Social Security Act is seen as the key legislation triggering modern mass retirement.8 At first sight, a 'supply-side' explanation seems to possess a certain degree of plausibility, providing a perfect example of how the 'democratisation of retirement' has come about through popular pressure exercised via the ballot box. In the pages that follow, substantial evidence will be offered of grass-roots movements for a state pension scheme. The campaign that emerged in Britain at the end of the nineteenth century was initially led by middle-class reformers for conservative reasons; but it soon attracted an impressive amount of support from organised working people such that old age pensions became a radical socialist demand. The 1908 Old Age Pensions Act which followed was, despite its limitations, the most popular of the Liberal welfare reforms. Thereafter, pensioners' organisations were formed and constant pressure was exerted on governments to improve the state pension scheme, in terms of both level and coverage, to give a 'well-earned rest' to the 'worn-out worker' or the mother (less often mentioned), as a reward for citizenship. Such demands reached a crescendo in 1939, with the National Federation of Old Age Pensions Associations, the National Spinsters' Pensions Association, as well as the Labour Party and the Trades Union Congress, demanding higher pensions. Indeed, the potential danger of this popular pressure was one reason for the Treasury's long, and ultimately successful campaign to shift the funding of pensions to a contributory insurance basis. However, like all largely 'human agency' models of social change, a supply-side explanation fails in several respects. First, it does not explain the timing of events. The period between Baron Maseres's 1772 proposal for parish-organised annuity schemes for the 'industrious poor' and Canon Blackley's famous 1878 plan for 'national insurance' was positively brimming with pension suggestions from middle-class reformers. Yet it was only in the 1880s and 1890s that the debate on state pensions took off. We need to ask why. Second, it fails to explain the paradox that this late nineteenthcentury debate on the increasingly 'visible' poverty of the aged took place at a time when the old age pauperism rate was declining. Interestingly, this led late nineteenth-century conservatives (for example, within the Charity Organisation Society) to the logical conclusion that state pensions would not only be corrupting (in that they would weaken 8

Carole Haber and Brian Gratton, Old Age and the Search for Security. An American Social History (1994).

Introduction

11

individual and family responsibility), but that they were not needed. Old age poverty per se was thus not the key reason for the campaign for old age pensions. Third, it does not explain the gendered paradox that this late nineteenth-century debate on old age poverty was a highly masculinist one. Although women outnumbered men in old age (by nearly two to one in the post-1908 pensioner population), and although there has always been a substantial feminisation of poverty in old age, the 'problem' of old age poverty was usually constructed in terms of a masculinist, military metaphor of the 'worn-out worker' deserving to be 'de-mobilised' from the 'industrial army'. The focus of concern in the pensions campaign was thus on the crisis of the older male worker. Essentially, it was an industrial concern. Fourth, a 'supply-side' model collapses in the face of the volumes of evidence from the 1920s and 1930s that few chose willingly to 'retire' on a pension of 10s Od a week; in fact, it is clear that older workers desperately tried to cling on to jobs for as long as possible. All the evidence from contemporaries shows that jobs for older workers were inexorably disappearing, causing retirement to be forced upon individuals not because of their infirmity (as had been the case in the past), but because there was no work for them. In the aggregate, 'jobless' retirement gradually replaced 'infirmity' retirement, and on a far greater scale. Finally, the recent progress of 'early' retirement must be considered. Between 1951 and 1971, the economic activity rates of men aged 55-9 remained fairly constant (at 95.0 per cent and 95.3 per cent respectively); by 1994, however, the effects of diminishing labour market demand - consequent upon a transition to a new, 'post-industrial' capitalism - had lowered this to 76.1 per cent. Significantly, women aged 55-59 experienced increasing labour force participation rates in the same period - from 29.1 per cent in 1951, to 50.9 per cent in 1971 and 55.7 per cent in 19949 - because of the rising demand for 'feminised' labour. The second explanatory model is thus much more convincing, and is the one that is more favoured in the pages that follow. This argues that retirement has spread more because of a decline in the demand for older workers. As advanced industrial economies become more specialised, with a greater emphasis on technology-intensive production methods, and hence skill and adaptability, so older workers will be forced out of the labour market and marginalised into economic uselessness and a 9

Alan Walker and Tony Maltby, Ageing Europe (1997), p. 76.

12

The campaign for old age pensions

consequent loss of social status. They will find themselves increasingly concentrated in 'light', undemanding occupations, or in relatively outmoded labour-intensive sectors (such as coal-mining or agriculture in the inter-war years) where, on retirement, they will not be replaced. New, expanding industries only take on young workers. In effect, older workers are progressively 'de-skilled' and thus 'de-industrialised'. In such a society, increasing emphasis in the labour market will be placed upon youth (mirrored by the emergence of a 'youth culture' in society at large). This is precisely what began to happen in Britain from the 1890s onwards.10 Pension systems were thus not the prime cause: retirement was not 'manufactured' by the state via social policies. In Britain, the trend to 'jobless' retirement commenced roughly two decades before the first (1908) state pension scheme, and rates of retirement seem not to have been affected by subsequent pension legislation (notably, the introduction of a retirement condition in 1946). The growth of state pension coverage was thus a response to prior labour market imperatives. Such a stark polarisation between two explanatory models is, of course, of limited heuristic value: 'supply' and 'demand' are not autonomous, and in this study the complex symbiotic relationship between the two will be explored.11 'Choice' can only take place within a given economic context. Once demand-side factors had operated for several decades, such that a critical mass of retirees was created, then a 'culture of retirement' or a 'retirement tradition' or even a 'medicalisation of retirement' became internalised by individuals and normalised in culture, manifesting itself in consumer expectations and in political campaigns. These expectations were articulated in a powerful language of democratic rights, citizenship and social justice. But abstract principles of justice were more the rationalisation of labour market imperatives than they were prime determinants of social policy. The distinction between 'infirmity' retirement and 'jobless' retirement is also of necessity crude. Analysts of the retirement experience have always shown that there is a blurring of the boundary between the two. Older workers may define themselves as 'infirm' because they are effectively jobless, or vice versa: such was the experience of the workingclass friendly societies in the 1890s; it was also noticed by social researchers in the 1950s;12 and the rise in disability and long-term 10

The definitive work, broadly applying such an analysis to the USA, is William Graebner, A History of Retirement. The Meaning and Function of an American Institution, 1885-1978(1980). 1 * For a sensitive discussion, see Frank Laczko and Chris Phillipson, Changing Work and Retirement. Social Policy and the Older Worker (1991). 12 For the 1950s, see Sarah Harper, 'The Emergence and Consolidation of the

Introduction

13

sickness benefit claims in the 1980s and 1990s was likewise partly a product of growing labour market insecurity.13 The changing status of old age In measuring the transformation of the 'old age experience' from preindustrial to late-industrial societies, historians have offered a number of models. One provocative and influential example is the 'veneration to degradation' thesis, put most cogently by the American historian David Hackett Fischer. In Growing Old in America (1977), Fischer has argued that in pre-industrial societies old people are highly valued for their rarity, authority, wisdom and - especially in societies where an oral tradition predominates - accumulated knowledge. They possess enormous value to the community or tribe as its natural leaders, and to the family as carers of children in a highly labour-intensive economy where both parents may have to work long hours. In short, they are venerated, and may even be accorded priest-like status. But industrialisation gradually robs them of this social value: the nuclear family dispenses with their services, and pushes them out of the nest; more citizens survive to old age, and thus their scarcity value is eroded; industrialisation creates a more specialised division of labour, with a greater premium on youth, skill and adaptability, and old people are seen as increasingly irrelevant to the labour process; the spread of mass education and literacy means that knowledge is encapsulated by the written word, and then within sophisticated information systems, and the oral tradition is lost. Old age thus brings obsolescence. In its cruder forms, this thesis can imply that in the past there existed some 'golden age of senescence', in which the aged were universally revered. Fischer, however, does not claim this: he recognises that in preindustrial societies there existed many contradictory customs and attitudes towards old people, and that the very old - the 'overaged', 'already dead' or inhabitants of the 'sleeping period' - were usually judged to be senile and were cruelly put to death.14 Thus it is important to remember that while the ageing of Western nations has led to much more rigid definitions of old age itself, the twentieth century did not invent inequalities of age. In pre-industrial and early modern societies, old age tended to be conceptualised by reference to certain cultural touchstones, such as wrinkled skin, grey

13 14

Retirement Tradition in Post-War Britain', in Michael Bury and John Macnicol (eds.), Aspects ofAgeing: Essays on Social Policy and Old Age (1990), pp. 12-29. Laczko and Phillipson, Changing Work, ch. 5. David Hackett Fischer, Growing Old in America (1977).

14

The campaign for old age pensions

hair, toothlessness, grandparenthood, the menopause or the inability to perform crucial tasks. Such societies displayed complex attitudes towards their older members,15 and age-related status inequalities have worked in a variety of ways: in some tribes, such as the Samburu pastoral nomads of Northern Kenya, powerful social gerontocracies existed, with elderly men dominating tribal and family politics, excluding young bachelors from participation and even taking extra wives for themselves as they grew older; in others, the practice of ancestor worship would extend to the veneration of their older members, investing them with an almost mystical function as living repositories of wisdom and folklore (elderly women, for example, would possess a unique body of knowledge on matters of pregnancy and childbirth). Yet anthropological literature is also replete with examples of brutal sanctions being brought to bear against the old: parricide often existed as a culturally approved method of sons obtaining access to family land, and old women could find themselves suspected of witchcraft precisely because of their accumulated knowledge. In short, age divisions and age conflicts were commonplace.16 Likewise, historians of the early modern period have considerably enlarged our understanding of old age by pointing to the historical continuities in societal attitudes, especially the shifting balance between support of the aged by family, community and local state.17 Structured dependency What, then, is new about the 'old age experience' in the twentieth century? In attempting to answer this question, several radical analysts of old age posited the concept of 'structured dependency' in the 1980s as a deliberate counter to the outmoded platitudes of disengagement theory.18 Rather than viewing old age as an aggregate experience, a 'structured dependency' analysis emphasises that there will be substantial differences in the status of retired people according to factors of class, gender, race and age. As Alan Walker has argued: 15

16

17

18

See, for example, Keith Thomas, 'Age and Authority in Early Modern England', Proceedings ofthe British Academy, vol. LXII: 1976 (1977), pp. 205-48. Nancy Foner, Ages in Conflict: A Cross-Cultural Perspective on Inequality between Old and Young (1984). See, for example, Margaret Pelling and Richard Smith (eds.), Life, Death and the Elderly. Historical Perspectives (1991). See, for example: Alan Walker, 'Towards a Political Economy of Old Age', Ageing and Society, vol. 1, pt. 1, March 1981, pp. 73-94; Peter Townsend, 'The Structured Dependency of the Elderly: A Creation of Social Policy in the Twentieth Century', ibid., pp. 5-28; John Macnicol, 'Old Age and Structured Dependency', in Bury and Macnicol, Aspects ofAgeing, pp. 30-52.

Introduction

15

It is mistaken to regard elderly people as a homogenous group which might coalesce around a single politics of old age. In other words, there is not one but several politics of ageing, depending not on age as such but on socio-economic status, race, gender and religion . . . Older people carry into retirement inequalities created and legitimated at an earlier phase of the life cycle, particularly though not exclusively through the labour market.19 These components of structured inequality in society at large determine inequalities in old age, such inequalities widening with the transition to retirement. 'Dependency' is, at best, a highly contestable term, but in this context it connotes loss of direct access to the labour market, and its replacement by reliance on social security. The extent of this dependency cannot be denied. By the early 1990s, there were some ten million state retirement pensioners in Britain (men aged 65+, women aged 60+), and the cost of supporting them in pension and other social security payments totalled £34.5 billion (for 1992-3) - roughly equivalent in any one year to the entire cost of the National Health Service. Social security payments to the retired amounted to 47 per cent of total benefit expenditure in 1992-3, and social security absorbed fully one-third of public expenditure. As John Myles and others have argued, advanced industrial welfare states are essentially welfare states for old people, since they form by far the largest group of clients. 20 The scale of such state dependency by the retired is one reason why governments in both Britain and the USA in the 1980s and 1990s found it so difficult to cut public expenditure. As the Permanent Secretary at the Department of Health and Social Security (DHSS) attested in 1986, elderly people are 'the major pressure on social security expenditure', and 'the single major challenge facing the DHSS'. 21 It is evident, therefore, that the ageing of the British population has been a major reason for the establishment of an advanced, comprehensive and possibly 'irreversible' welfare state, for the growth of state dependency, and for the emergence of a substantial poverty population. However, there is a positive side to the equation. The 'greying' of the British population has also been an enormous success story. Increasing numbers of citizens have survived to old age, enjoying better health status and higher living standards than their parents. Historically unprecedented proportions of the population have been sustained 19

20

21

Alan Walker, 'The Politics of Ageing in Britain', in Chris Phillipson, Miriam Bernard and Patricia Strang (eds.), Dependency and Interdependency in Old Age: Theoretical Perspectives and Policy Alternatives (1986), p. 37. John Myles, Old Age in the Welfare State: The Political Economy of Public Pensions (1984), p. 2. Sir Kenneth Stowe, quoted in Michael McCarthy, The New Politics ofWelfare (1989), p. 37.

16

The campaign for old age pensions

independent of the labour market. The majority of old people lead lives not limited by disability or serious health problems. For many, old age brings happiness, time for relaxation and reflection, a chance to reestablish quasi-parental relationships (with grandchildren) and freedom from drudgery. By the 1990s most retired people were healthy, were leading independent lives and were contributing greatly to the informal economy by performing a multitude of unpaid but vitally important tasks for their own children, for neighbours or for the community. Old people also represent the living embodiment of our past and thus bestow identity, continuity and meaning to younger generations. Without them, society would be infinitely the poorer. Such a positive view provides a valuable corrective to the portrayal of old age as an existential wasteland facing us at the end of our lives.22 Conclusion This study examines the period 1878 to 1948, beginning with the publication of Canon Blackley's state pension proposal and ending with the establishment of the Beveridge social security system. It was a crucial stage in the evolution of old age, witnessing a sharp rise in the number and proportion of old people: between 1901 and 1951, the number of persons aged sixty-five or over tripled, from 1,734,000 to 5,332,000, and as a proportion of the population, they grew from 4.7 per cent to 10.9 per cent. By the late 1940s, 'old age' had indisputably entered the social agenda; geriatric medicine was taking off as a specialism; the first social surveys of old people were being conducted, where previous ones had tended to regard them as incidental; demographic alarmism was being repeatedly expressed about the 'burden' of an ageing population; significant organisations and pressure groups had been established dealing with the needs of old people; and, most of all, a retirement condition had been attached to receipt of the state pension. Originally, the intention was to examine only the 1918-48 period, given that the previous forty years have had some coverage by a number of historians;23 but in the course of investigating this earlier period it became evident that several avenues remained surprisingly unresearched, that new ideas suggested themselves, and that some historical 22

23

See, for example, Pat Thane, Economic Burden or Benefit? A Positive View of Old Age (1987). See, for example: Jill Quadagno, Aging in Early Industrial Society. Work, Family, and Social Policy in Nineteenth-Century England (1982); Patricia Mary Williams (Pat Thane), 'The Development of Old Age Pensions Policy in Great Britain, 1878-1925' (University of London (LSE) Ph.D. thesis, 1970).

Introduction

17

received wisdoms required modification. Hence the scope of the book became greatly enlarged, and the analysis much more detailed. In the pages that follow, this study attempts to combine a 'political economy' explanation with a 'human agency' one: long-run economic trends have marginalised old people but, nevertheless, old people have always possessed enormous potential political power. The fact that this power has never been fully realised is part of the story told here. This study thus tries to describe both the economic background and the processes of campaigning, negotiation and compromise by leading actors in the policy-making drama that made up a lively 'politics of retirement'. As will be shown, those old people who formed pressure groups struggled long and hard to fashion positive identities for themselves and their fellow members. Such ethnographic evidence as exists (for example, from social surveys of the 1930s) reveals that, on an individual level, old people showed courage and defiance in the face of the steady erosion of job opportunities. Rather than marginalising old age, this study will demonstrate its inter-connections with other social issues. In the process, many fascinating paradoxes will be unearthed: for example, the organisation that was the most powerful campaigning group for the economic rights of old people (the Trades Union Congress) was also the strongest advocate of a retirement condition which in many ways was a flagrant and draconian interference with the rights of older workers. But, ultimately, actors in the policy-making drama were working within the economic constraints imposed upon them by complex shifts in the evolution of advanced industrial capitalism. The 'politics of retirement' was a richly creative human response to these economic constraints.

The nineteenth-century background

In the last quarter of the nineteenth century, the British economy underwent profound structural changes. Broadly speaking, the process of industrialisation moved to a 'late', 'advanced' or 'mature' stage, marked by an increasingly technological and less labour-intensive mode of production. The social changes brought about by this economic transition were extremely complex, nuanced and reactive upon each other, and can only be quickly summarised here. Unprecedented improvements in transportation systems (such as the steamship and the motor vehicle) began the process now termed 'globalisation', throwing British firms open to the chill winds of international economic competition; associated with this was a new concern with the health and productivity of the individual worker as a unit of labour, in turn giving rise to a social debate on poverty and national fitness. In an increasingly competitive society, men and women had greater incentives to control their own fertility, bringing about a steady fall in the birth-rate; demographers thus view the late nineteenth century as heralding a new phase of the demographic transition. A 'women's movement' emerged, first to campaign for the vote but then to address wider issues of legal, social and economic inequality between the sexes. In 1884 there was passed a third Reform Act which, to prescient observers, made mass democracy a future inevitability: as a result, there developed a 'new politics' in which the vote of the working class was courted through social reform proposals. Socialism emerged as a viable political ideology; though the British working class remained for a long time deferential and conservative, the appearance of a Marxism-influenced socialism in the 1880s offered a much harder-edged economic critique of capitalism and permanently changed the political culture. For the first time, trade unions of unskilled workers were successfully established and sustained (where in the past they had petered out), ushering in a new and more intense kind of industrial warfare. In 1870 there was passed the first of a series of Education Acts which were to lengthen the process of schooling in response to the need for a more literate and numerate workforce. 18

The nineteenth-century background

19

Gradually, the small family firm gave way to the large unit of production (notably, the joint-stock company) which used more scientific management techniques, rendering the relationship between employer and employee more impersonal; precise divisions of labour and job grading were introduced, including the rule of a fixed retirement age. Managerial and industrial efficiency motives began to be more and more influential: retirement on an occupational pension was one way of removing older staff who might block channels of promotion and inhibit the ambitions of their younger colleagues; pensions were also a way of instilling loyalty and discouraging employee turnover. During the second half of the nineteenth century in Britain occupational groups began to receive private pensions as part of the contract of employment: for example, civil servants from 1859, and elementary schoolteachers from 1892. By the time of the First World War, most advanced industrial societies had state and occupational schemes similar to Britain's, the consensus of opinion being that eligibility ages should be somewhere between 60 and 70. * From the late nineteenth century onwards, retirement in old age slowly spread until, one hundred years later, it had become a social norm. The spread of retirement in its modern form was thus a product of the complex interaction of social, political, economic and demographic changes. Searching for one principal cause may well be fruitless, since we are dealing with what the Report of the 1944-9 Royal Commission on Population, in a different context, called 'a complex web, rather than a chain, of cause and effect'.2 Nevertheless, this study will argue that declining labour market demand was crucial in triggering off 'modern' retirement. In retrospect, it can be seen that shifts in labour market demand have created the economic context within which have occurred four great social changes over the past two centuries. Put briefly, different groups in the population have experienced altered relationships to the formal labour market; and in a society where labour market value has been the touchstone of citizenship status, this has had profound consequences. First, children were slowly de-industrialised over the course of the nineteenth century (by a series of Factory Acts) as their labour became less and less necessary; the obverse of this development was, of course, that the increasingly technological mode of production required a better educated workforce, and hence successive cohorts of children experienced longer periods of schooling. This had profound effects upon 1

2

Hannah, Inventing Retirement, 1; Pat Thane, 'The Muddled History of Retiring at 60 and 65', New Society, 3 Aug. 1978, pp. 234-5. Report of the Royal Commission on Population, 1949, Cmd. 7695, p. 38.

20

The campaign for old age pensions

fertility and family formation behaviour. Second, married women's relationship to the formal labour market also changed. In 1851, some 25 per cent of married women were classified as 'occupied'; but by 1901 this had fallen to 10 per cent, and remained there until the Second World War. However, by the late 1980s this participation level had risen to 64 per cent (albeit much of it in part-time work), and the effects of women's increasing economic independence on demographic and family-formation behaviour was arousing much comment. (There are, of course, many problems arising from the changing census definitions of labour market participation by women - problems which are similar to measuring the labour force participation of older males.)3 Third, from about the 1880s onwards, older male workers began to experience a slow crumbling away of job opportunities: hence, whereas in 1881 nearly 75 per cent of males aged 65+ were recorded as engaged in the formal labour market, by the 1990s this had diminished to about 8 per cent. The fourth group to be profoundly affected by labour market changes have been unskilled working-class males, who, since the 1960s, have been slowly de-industrialised, giving rise to the social and human problem that is encapsulated by the contentious term 'underclass'. It is the third group that is the subject of this study. Why did retirement slowly spread from the late nineteenth century onwards, and, more importantly, how did British society cope with the prospect of maintaining growing numbers of aged citizens who possessed little independent income? Retirement has always existed, and has always been an ambiguous and contradictory social experience. Far back into history, we can find examples of old age inducing individuals to withdraw from an active working life. Such voluntary retirement was mainly confined to the wealthy and powerful - those who could afford to spend their dwindling years in comfort and leisure. Until the twentieth century, the mass of the population faced a very different prospect in old age. For them, retirement was usually a consequence of loss of working capacity. To begin with, high levels of infant mortality whittled down the size of the child population, greatly affecting an individual's chances of survival to adulthood. Once in adulthood, the risks of death were considerably lessened: by the 1880s, 45 per cent of males aged 25, and 52 per cent of females, survived to the age of 65 - a one in two chance of survival, these odds improving with age. But a 'culture of mortality' in childhood engendered in working-class adults a profound pessimism about their 3

For a thoughtful exploration, see Pamela Sharpe, 'Continuity and Change: Women's History and Economic History in Britain', Economic History Review, vol. 48, no. 2, 1995, pp. 353-69.

The nineteenth-century background

21

prospects of surviving to old age. Early campaigners for old age pensions, like Joseph Chamberlain, recognised that exhorting the working class to save for old age was pointless since it contradicted their deeply held expectations that they simply would not live that long, even if this pessimism did not accord with the evidence from life-tables. As Leonard Courtney put it, 'can a butterfly even think there is going to be a winter?'4 The pattern of life for most working people in rural communities was thus quite straightforward: it was to go on working for as long as one was physically capable, moving to lighter or casual jobs, at progressively lower levels of pay (often, in old age, supplemented by Poor Law outdoor relief), until rendered completely unemployable by ill-health, accident or disability. For those too infirm to work, the final years of life were likely to be a precarious existence: every effort would be made to eke out a meagre living - by obtaining outdoor relief, by appealing to charities, by selling furniture and personal effects, by begging, by moving in with relatives - until all resources were exhausted. The last resort would be the Poor Law workhouse. The nineteenth-century Poor Law category 'aged and infirm' is testimony to this. Some historians have maintained that retirement is not a twentiethcentury phenomenon, and that one can discover, at certain points in history and in certain parishes of England, proportions of local populations equivalent to the ratio of retirees in advanced industrial societies. For example, Richard Smith has persuasively argued that the social history of old age over several centuries has been marked by shifts of emphasis between family care and care by the community through institutions such as the Poor Law. Communities in early modern Britain displayed crude 'dependency ratios' of old to non-old that were as high as those of today. The myth of retirement as a twentieth-century phenomenon is said to arise from a comparison with the nineteenth century only. In fact, Smith argues, the nineteenth century was quite untypical, in that it had a very youthful age structure, with exceptionally high labour force participation rates by elderly male workers. He does recognise the 'crucial character of the transformed circumstances surrounding the elderly and their relationship with the community in the mid- or late-twentieth century' which 'may well owe much to processes specific to the welfare system of the capitalist state', but, nevertheless, the message implicit in this view is that there is little significant 4

Comment by Courtney, 'Discussion on Mr. Booth's Paper: Enumeration and Classification of Paupers and State Pensions for the Aged5, Journal of the Royal Statistical Society', vol. 55, pt. 1, March 1892, p. 60.

22

The campaign for old age pensions

difference between the experience of retirement today and that in early modern times.5 However, this study disagrees. Instead, it will argue that, from the 1880s onwards, older workers were steadily shaken out of a labour force that was becoming more technology-intensive and segmented into increasingly specialised divisions of labour. Gradually, the labour market niche that had been occupied by older workers was closed off. There may have been significant levels of 'retirement5 in early modern Britain (consistent with slow economic and demographic change), followed by a new demand for older labour as the industrialisation process took place: there is strongly suggestive evidence that the labour force participation of older males peaked towards the end of the nineteenth century, before declining. However, from the late nineteenth century onwards, the nature of retirement would change in several key respects: it would apply to a much larger section of the aged population, and hence be a near-universal experience (even if, within the retired population, there were sharp differences based on class, gender, age and - after the 1950s - ethnic status); the retired population would itself form a much larger proportion of the total British population; the majority of retirees would be dependent on one single state pension scheme; and the most crucial difference would be that, in contrast to the past, retirees would be retired primarily because there were no jobs for them rather than because of their ill-health. Thus, in the aggregate, 'jobless' retirement replaced 'infirmity' retirement, and on an infinitely greater scale. Paradoxically, retirement spread as the health status of old people dramatically improved, rendering them more capable than ever of working in old age. All these features were historically novel, making retirement a qualitatively different experience.6

The progress of retirement According to census data, the labour force participation rates of males in Britain aged 65+ steadily fell from the 1880s to the 1990s. The actual number of older males who were 'gainfully occupied' increased from 451,000 in 1881 to 683,000 in 1931, and then declined slightly to 565,000 in 1961. But, of course, the total male workforce increased 5

6

Richard M. Smith, 'The Structured Dependence of the Elderly as a Recent Development: Some Sceptical Historical Thoughts', Ageing and Society, vol. 4, pt. 4, Dec. 1984, pp. 409-28, quote from p. 425. For a brief discussion, see: Chris Phillipson, Capitalism and the Construction of Old Age (1982), pp. 3 7 - 8 .

The nineteenth-century background

23

Table 2.1. Proportion of males aged 65+ defined as 'economically active' 1881-73.6% 1891-65.6% 1901 - 61.4% 1911 - 56.9% 1921 - 58.9% 1931-47.9%

1941-no census 1951-31.1% 1961 - 24.4% 1971 - 23.5% 1981 - 10.3% 1991- 8.7%

(from 8,852,000 in 1881 to 14,790,000 in 1931 and 16,071,000 in 1961),7 as did the overall population. Thus the trend in labour/force participation was downward, as shown in table 2.1. / Allowing for the anomaly of 1921 and the probable faster rate of fall in the recession-hit 1930s, and smoothing out the differences, we can conclude that the labour force participation rates for older males fell by a rough average of six percentage points each decade from 1881. However, if based upon census data this downwards gradient is misleading. The census was taken every ten years (1891, 1901, etc.) in peacetime conditions. Thus it fails to record the two crucial periods which present us with a counterfactual that substantiates the central thesis of this study - the two World Wars. In both, wartime production stimulated the old 'heavy' industries and set up a demand for labour (exacerbated, of course, by manpower shortages caused by military callup) . In effect, on each occasion the British economy temporarily 'moved back' in production methods to where it had been several decades before. Consequently, the labour force participation rates of older men rose. The First World War did not fall into a census year, but we can get a rough idea of the direction of change if we examine the take-up of noncontributory pensions. (Because the scheme was means-tested, this take-up rate was a proxy for the economic circumstances of pensioners.) The number of pensioners fell from 987,238 in 1915 to 920,198 in 1919, despite an increase in the overall number of old people.8 In addition, the 1921 census showed a rise in labour force participation by older males (compared with 1911), indicating that they had temporarily remained in employment in the immediate post-war boom. During the Second World War, the 1941 census could not take place. But there exists evidence of pensioner working in the form of a survey conducted 7

8

R. C. O. Matthews, C. H. Feinstein and J. C. Odling-Smee, British Economic Growth 1856-1973 (1982), p. 563. This fall was also partly explained by inflation eroding the eligibility income limit.

24

The campaign for old age pensions

each half-year of surrendered National Insurance contribution cards. (Those who continued working past pensionable age - 65 for men, 60 for women after 1940 - paid no contribution, but their employer had to pay an unemployment insurance and pension contribution.) The number of men aged 65+ surrendering stamped cards (and hence having performed some work) for the first half of 1939 was 322,000. For the first half of 1945, however, the figure was 622,000 - an increase of nearly 100 per cent, despite the fact that the total population of men aged 65+ grew by only 16 per cent. After 1945, there was a sharp fall in the number of such surrendered cards by older workers, as normal peacetime economic conditions returned.9 In examining the politics of retirement, the evidence used in this study will tend to be qualitative and testimonial, rather than quantitative. It will be left to future historians - braver and more numerate than this author - to mount massive econometric investigations into the precise timing and rate of retirement industry by industry, correlating such trends with the rate of technological innovation in each industry.10 Econometric indicators may be illustratively helpful, but they have their limits. It is clear that census data are not sensitive enough to measure the rich complexity of the labour force participation of older workers in the period 1878-1948. As the young William Beveridge commented as early as 1909, census returns of occupations have 'a very indirect and doubtful bearing upon questions of employment'.11 This study will show that notionally precise terms like 'retired' or 'gainfully occupied' were in fact misleading, since most males aged 65+ were awkwardly poised somewhere between these two states. The surveys of Charles Booth in the 1890s and David Caradog Jones in the 1930s showed that the labour market status of older males was extraordinarily complex and ever-changing, and that they drew their income from many different sources. Census data thus both under- and over-record the 'economic activity' of older people. On the one hand, all the testimonial evidence suggests that, given the prospect of having to survive solely on a 10s Od pension, many men and women aged 65+ in the 1930s sought out as much informal, casual or part-time work as was available, outside the 'insured 9

10

11

Report of the Royal Commission on Population, p. 115. These numbers are obviously rounded up. For a preliminary exploration, see: Paul Johnson, 'The Employment and Retirement of Older Men in England and Wales, 1881-1981', Economic History Review, vol. 47, pt. 1, 1994, pp. 106-28; Stuart M. Riddle, 'Age, Obsolescence and Unemployment. Older Men in the British Industrial System, 1920-1939: A Research Note', Ageing and Society, vol. 4, pt. 4, Dec. 1984, pp. 517-24. W. H. Beveridge, Unemployment, a Problem of Industry (1909), p. 121.

The nineteenth-century background

25

trades'. On the other hand, the official definition of 'gainfully occupied' in the formal labour market was over-optimistic. In the 1930s, unemployment reduced the effective total of 'gainfully occupied' older males by one-sixth. Of those who remained, many worked episodically: a survey of surrendered stamped National Insurance cards by those pensioners who had been in insurable employment during the first half of 1939 showed that only about 60 per cent were fully stamped for 26 weeks; 25 per cent had 14-26 stamps, and 15 per cent had 1-13 stamps.12 On this basis, the number of fully 'gainfully occupied' older workers should be reduced by a deflator of up to 40 per cent. To complicate matters further, social investigators in the 1930s noticed that many older men who were de facto retired were reluctant to relinquish the formal category of 'gainfully occupied' (since this involved the painful self-admission that incapacity had arrived) and recorded themselves as such in the 1931 census. Because of the limitations of census data, this study will rely upon the much more conventional source material of recorded observations by contemporaries. These testimonies are, of course, also problematic, in that we cannot be sure that contemporaries were fully aware of what was happening to their economic surroundings. (The rationale for econometric analysis is that it can reveal in retrospect what was not realised at the time.) But in the case of retirement one cannot help being struck by the unanimity of testimonial evidence. Nearly every thoughtful commentator agreed that, from the end of the nineteenth century onwards, older workers were being inexorably forced out of the labour market by structural changes in the economy. As will be shown, there was a remarkable degree of consensus among people of all political positions that this was happening, and that it was a significant, new development. Despite eschewing quantitative methods, this study is built upon the contention that the shift in the mode of production to a 'late-industrial' economy was the prime causal agent altering the status of older people. In no way does this model of agency imply a crude 'base/superstructure' economic reductionism - scarcely sustainable in these 'post-Marxist, post-modernist' times - but hopefully it will explore how human beings responded to these structural changes (albeit often imperfectly understanding them), tried to influence them (usually unsuccessfully), and fashioned a lively 'politics of retirement' out of the range of strategies for dealing with them. Cultural and political responses to the spread of retirement were 12

Memorandum by Sir George Epps (Government Actuary), 'Ministerial Enquiry into Old Age Pensions', 1 Dec. 1939, Public Record Office (henceforth PRO) T 161/995 (S. 45029/4).

26

The campaign for old age pensions

exceedingly complicated, segmented by factors of class, gender, age, place, and so on. Even within these broad social divisions, there were sectional interests. Hence, for example, the National Spinsters' Pensions Association was a movement of working-class and lower middle-class women, but its membership was concentrated in certain geographical areas (often textile manufacturing), and it displayed a militant sectional consciousness that was hostile both to feminism and to the interests of married women. The National Federation of Old Age Pensions Associations was a radical left-wing organisation of pensioners, displaying a reckless militancy that was built upon contempt for the 'sham' of parliamentary democracy. By contrast, the inter-war trade union movement took a highly masculinist perspective, focusing on the interconnected problems of both young and old male industrial workers and scrupulously obeying the established conventions of political lobbying. In the pages that follow, much attention will be paid to the importance of human agency, diversity of interests, political negotiation and bureaucratic compromise. Personalities did matter, as in Neville Chamberlain's extraordinary determination to introduce a contributory pensions scheme in 1925, or in the bitter rivalries between Labour leaders that helped torpedo the retirement pensions plan of 1929-30. Again, the 'culture of old age' is a richly rewarding area of historical study: for example, there is considerable scope for projects that examine the changing social construction of old age as manifested in popular iconography and imagery,13 the precise economic circumstances of old people, the making of 'old age identities' by reference to popular culture, or the especial 'old age experience' of women. To an extent, old people have had to remain mute and inglorious. This study, lengthy as it is, can only examine one part of the impact of retirement. It cannot be a comprehensive 'social history of old age' since really what is needed are several discrete 'social histories of old age'. It is, instead, an examination of how many different actors and interest groups fashioned a lively 'politics of retirement' in the face of structural labour market changes, denning the 'problem' of retirement in many different ways, and how the state responded via its pension scheme. As such, it tries to combine, unobtrusively and eclectically, some recent approaches in historical analysis with the more old-fashioned genre of detailed 'grand narrative' that is unavoidable in tracing the life-history of a social policy. This study repeatedly stresses the paramount importance of the 13

Two notable examples of this kind of approach are: Andrew Blaikie, 'Photographic Memory, Ageing and the Life Course', Ageing and Society, vol. 14, pt. 4, Dec. 1994, pp. 479-97; and Thomas R. Cole, The Journey of Life: A Cultural History of Ageing in America (1992).

The nineteenth-century background

27

labour market in setting the economic context within which human beings negotiated their own lives, both individually and collectively via political action. The intention is not to downplay cultural analysis, but to emphasise that cultural responses were ultimately only responses. Human beings displayed a Canute-like inability to halt the steady displacement of older workers from the labour force as a reflection of the evolving development of twentieth-century capitalism: hence efforts to speed up the rate of retirement in the 1930s were as unsuccessful as those to slow it down in the 1950s. Pensions policies tended to follow, thus rationalising and possibly accelerating, long-run shifts in the structure of the labour market. Only a 'political economy' approach can successfully answer several key historiographical questions in the emergence of a 'politics of retirement'. Why was it from the late nineteenth century onwards, rather than earlier or later, that older workers began to leave the labour force? Why did a widespread debate on old age poverty commence only then, given that old age poverty had always existed? Why did Canon Blackley's 1878 pension proposal pass into history, when there had been many such ideas published in previous decades? Why did the poverty of the aged become more 'visible' in the 1880s and 1890s - just at the time when the rate of old age pauperism was declining? Why did pension campaigns appear in other countries at comparable stages of economic development, or with 'industrial' social attitudes - pension schemes passing into law in Germany in 1889, Denmark in 1891 and New Zealand in 1898? And how can one explain the gendered paradox that the debate on retirement primarily concerned the plight of the male older worker, when the highest rates of poverty in the nineteenth century had always been among old women? The question of timing - always a key question in historical analysis is particularly interesting in the case of retirement, for we can find many examples of pension suggestions before the late nineteenth century. In 1772 a proposal was made by Baron Francis Maseres of the Court of the Exchequer to set up annuity schemes in parishes for the industrious poor; a bill to this effect was introduced into the House of Commons in the following year, but was rejected by the Lords.14 In The Rights of Man (1791 and 1792), Thomas Paine advocated an annuity as of right of £6 per annum to everyone aged over 50, and £10 per annum to all aged over 60, the funds to be provided by a graduated tax on estates. In 1796, William Pitt proposed parochial funding of the aged, widows and orphans, and in his Treatise on Indigence (1806) Patrick Colquhoun 14

Francis Maseres, A Proposal for Establishing Life-Annuities in Parishes for the Benefit of the Industrious Poor (1792).

28

The campaign for old age pensions

proposed an old age insurance scheme.15 Again, in 1879 there was published R. P. Hookham's suggestion for old age pensions in his Outlines of a Scheme for Dealing With Pauperism. Hookham was then aged 92, and stated that he had been formulating his ideas for at least three decades. Remarkably, Hookham proposed a universal pension scheme paying 6d per day at the age of 60 or 65, 9d per day at the age of 70 and Is Od per day at 80. Applying it to all social classes would divest the pension 'of the remotest resemblance to a charitable dole' so that it should be regarded 'as a debt due, a reward well earned, something to which the recipient is worthily entitled, causing him to hold up his head as a prize-winner'.16 Likewise, we should note that throughout the nineteenth century there had always been poverty in old age, especially amongst women; any Poor Law relieving officer would have testified to this.17 The question is, therefore, what made the poverty of the elderly more 'visible' at the end of the nineteenth century, given that the visibility of social problems depends as much upon the gaze of the beholder as on the plight of the subject? The answer must be located within a growing concern over three interconnected social trends: first, the most advanced sectors of the British economy were experiencing rapid technological developments that were shaking out older workers; second, this shift to a more technologyintensive mode of production, plus the new threat of international competition, were giving rise to fears about the health, productivity and industrial behaviour of young, able-bodied male workers - those who formed the backbone of the British industrial army; third, there was the question of how the Poor Law should be reformed, both to deal with these twin problems and to resist its democratisation in the light of the emergence of socialism. We must therefore begin our survey with a brief examination of what was happening in the late-Victorian labour market.

Labour market changes The division of labour in pre-industrial rural Britain was highly agestratified. Almost as soon as they could walk, children found themselves 15

16

17

Examples cited in: Joseph Chamberlain, 'Old-Age Pensions', The National Review, no. 108, Feb. 1892, pp. 721-2; J. Frome Wilkinson, The Blackley National Provident Insurance Scheme: A Protest and an Appeal (1887), pp. 1 - 2 . R. P. Hookham, The Question of the Day. Outlines of a Scheme for Dealing With Pauperism (1879), p. 6. For brief explorations, see: Pat Thane, 'Women and the Poor Law in Victorian and Edwardian England', History Workshop, no. 6, autumn 1978, pp. 29-51; Jane Lewis and David Piachaud, 'Women and Poverty in the Twentieth Century', in Caroline Glendinning and Jane Millar (eds.), Women and Poverty in Britain in the 1990s (1992), pp. 27-45.

The nineteenth-century background

29

performing simple tasks which increased in complexity with each succeeding year - scaring crows, clearing stones from fields, collecting windfall apples, picking up ears of corn after the harvest, and so on. Being the product of a centuries-old evolution, agricultural labour had developed a precise relationship between the demands of the job, the rhythm of the seasons and the physical capacity of the labourer. These dominated the working life-cycle. The multiplicity of different tasks to be performed were finely divided according to age and gender. By modern standards, agriculture was massively labour-intensive, and employed high proportions of children, youths, women (married and unmarried) and old people. Over the course of the nineteenth century, there occurred a migration of population from rural to urban areas. In 1851, 50.2 per cent of the England and Wales population lived in urban districts, and 49.8 per cent in rural; by 1911 these proportions had changed to 78.1 per cent and 21.9 per cent respectively (more or less staying constant thereafter). There was thus a substantial drift of labour from agriculture to industry: the proportion of males aged 20 and over employed in agriculture dropped from 25 per cent in 1851 to less than 10 per cent in 1901. In the early stages of the industrial revolution - essentially, from the late eighteenth century to the late nineteenth - this level of labourintensity continued, even if its locus gradually shifted to the factory. So labour-intensive was early industrialisation that there was still massive enlistment into the labour force: apart from adult males, women, children and the old were part of the industrial army. The decline in the proportion of the population employed in agriculture was compensated for by the voracious appetite for labour possessed by the early industrial economy. By the end of the nineteenth century a new stage of economic development was reached. Technological developments in industry began to displace older workers who were judged unable to learn new skills, or were, quite simply, surplus to requirements. Continued inmigration from rural areas to the cities (boosted by the late nineteenthcentury agricultural depression) intensified the competition for jobs in the urban labour market. More and more aged citizens were forced into retirement because there were no jobs for them. At the same time, the administration of the Poor Law became stricter after 1871, and outdoor relief became harder for the impoverished elderly to claim. The aged were caught in the pincers of these two trends, and their poverty became more a topic of public discussion.

30

The campaign for old age pensions

Youth and old age One important point must be stressed: old age and youth were interconnected social issues. The poverty of the aged would not by itself have been sufficient to impel a demand for old age pensions: after all, for most of the nineteenth century the propertied classes had turned a blind eye to acute old age poverty, especially in its feminised form. The real catalyst was that the impulse to economic modernisation was giving rise to a growing concern over the labour market behaviour and industrial efficiency of the young able-bodied worker. Thus conservative propagandists like Canon Blackley viewed state-sponsored contributory pensions as achieving twin results: the necessity of paying a large deposit between the ages of 18 and 21 would curb the reckless spending habits of the 'overpaid' young male and, in the process, remoralise him by socialising him into the capital accumulation process; at the same time, the cost to the Poor Law of supporting the aged would be greatly reduced by pensions in old age. From the 1880s onwards, there were growing fears over a 'residuum' of young casual labourers. Such concerns were to reappear regularly in the first half of the twentieth century, and were inextricably linked with the debate on the ageing of British society and the alleged inefficiency of older workers. We must remember, therefore, that 'social capital' concerns about younger workers (their health, their productivity, their willingness to work, their conformity to the discipline of the workplace, their industrial militancy) were the obverse of growing concerns about the 'worn-out' older worker whose industrial value was deemed to be very dubious, and who should thus be forced into retirement with the support of a state pension. Both were part of wider concerns about improved economic efficiency, industrial modernisation and manpower planning as British capitalism rode a series of crises in the first half of the twentieth century. Divisions of gender These twin concerns made the discourse on old age a highly masculinist one. Despite the fact that women outnumbered men in old age - and were to do so by nearly two to one in the post-1908 pensioner population - the male pronoun was repeatedly used to describe the aged, and the 'problem' was constructed in terms of a masculinist, military metaphor of the 'worn-out worker' deserving to be 'de-mobilised' from the 'industrial army'. This was more than a sexist convention: it revealed the crucial paradox that the late nineteenth-century debate about old age poverty was always a debate about older male

The nineteenth-century background

31

workers, yet the highest rates of poverty in old age were suffered by women. Throughout the nineteenth century, old women had always been poor, yet their plight had attracted little attention from the eager pamphleteers and vindictive moralisers of the middle class. When pensions were under discussion in the 1880s and 1890s, all the empirical evidence substantiated this. To give but one example: the 1900 Departmental Committee on the Aged Deserving Poor conducted a survey of a sample of old people to estimate how many had incomes below 10s Od per week (which was to be the point of eligibility for receipt of its proposed state pensions). Of 6,935 aged women surveyed who were not dependent upon the Poor Law, only 794 had incomes above 20s Od per week (an average low urban working-class wage), and 277 had incomes of 10s Od to 20s Od. Fully 3,294 had incomes below 10s Od per week, 1,818 were maintained by relations or friends, and 752 provided no information. (An additional 1,869 were in receipt of Poor Law relief.) In other words, only 15 per cent of those not dependent upon the Poor Law possessed incomes above what was proposed as the income cut-off point for pension eligibility. If those in receipt of Poor Law relief were included, the proportion fell to only 8 per cent. By contrast, out of a sample of 5,496 aged males, 2,684 (or 49 per cent of those not on Poor Law relief) had incomes above 10s Od per week.18 Despite such incontrovertible evidence of a substantial feminisation of poverty in old age, male pension campaigners of the 1880s and 1890s blithely went on proposing contributory insurance pension schemes that would have been utterly irrelevant to the old age income needs of women, because of their episodic or low-paid lifetime labour force participation. By the end of the 1890s, some campaigners - Charles Booth being a notable exception - were still seriously advocating a state pension scheme confined to the 'thrifty' (i.e. those who had been members of friendly societies): as Gertrude Tuckwell pointed out, this criterion would debar most women, because their low earnings made it impossible for them to join a friendly society.19 The great attraction of all contributory insurance pension schemes an attraction which continued to give them political viability long after their utter impracticality had been exposed - was that they would assist in the remoralisation of the male breadwinner and would involve minimal redistribution from rich to poor. In essence, they fitted perfectly with that long-standing conservative remedy of enforced redistribution 18

19

Report of the Departmental Committee on the Aged Deserving Poor, Cd. 67, 1900, Appendix II, pp. 13-15. Evidence by Tuckwell (Hon. Secretary of the Women's Trade Union League), Report from the Select Committee on the Aged Deserving Poor, 1899, p. 95.

32

The campaign for old age pensions

of a male's earnings across his life-cycle (and, implicitly, within the nuclear family). Class distancing and generational distancing towards young working-class males has been a feature of social debates throughout history,20 and was, not surprisingly, a powerful sub-text in the late nineteenth-century pensions discussion. For example, in opposing any form of state pension, Octavia Hill deployed the familiar middle-class argument (also used later by Eleanor Rathbone) that young male workers were 'overpaid' relative to their needs, and could easily save for their old age: It is the young people, especially the young boys, that have the money. They have a great deal. You see they get a good deal, when from 17 to 18, almost a man's wages in the unskilled trades; and at that time they could do a great deal if they would. One often hears of their spending 6s Od a day, in pleasure, and taking nothing back at night.21

In the chapters that follow, the gendered nature of the 'politics of retirement' will be traced. Often this is difficult, for frequently gender was powerful by its very absence in explicit discussion. But close reading of the texts of the time shows that the late nineteenth-century debate on old age was highly gendered: fears of eroding male work incentives were combined with a marked reluctance to discuss the poverty of aged women. The moralistic classifications of thrift supporters reflected this gendered division: for example, George Bartley MP, in giving evidence to the 1893-5 Aberdare Commission divided the destitute elderly into three classes: (a) the old age of men whose earnings enable them to provide, but who have not done so; (b) the old age of men whose earnings render it impossible, or almost impossible, for them to provide sufficient for comfort in old age; (c) the old age of widows and single women. The solutions proposed by Bartley for each group reflected the judgemental mixture of morality, gender and labour market value. Those in group (a) were to be left to the mercy of a more deterrent Poor Law: it would be 'mischievous' to give them anything else. Group (b) should be helped by any proposed pension scheme. Bartley had little to say about the poverty of group (c), since they were not part of the new industrial problem.22 The social policy agency through which the young male worker was to 20

21

22

For an entertaining discussion, see Geoffrey Pearson, Hooligan: A History of Respectable Fears (1983). Royal Commission on the Aged Poor, 1895, C-7684-II, vol. Ill, Minutes of Evidence, p. 553. Ibid., C - 7 6 8 4 - I , vol. II, Minutes of Evidence, pp. 4 1 5 - 1 7 .

The nineteenth-century background

33

be disciplined in the late nineteenth century was the Poor Law. Thus the emergence of a debate on old age poverty just before the turn of the century must be analysed in the context of the changes that were taking place within the late nineteenth-century Poor Law, and the movement to restore it to its strict 1834 principles. Old age and the Poor Law If we look back at the history of the Poor Law, we can see that the problem of the aged was always linked to the problem of the young. From its gradual and hesitant beginnings, the English Poor Law made a clear distinction between the 'able-bodied' (essentially, young males) who possessed high labour market value, and the 'impotent' poor (the aged, children, lunatics, invalids and - to some extent - single mothers) whose labour market status was marginal. As far back as 1388, an Act attempted to designate the 'impotent poor' as a separate category, and Elizabethan Poor Law policy continued this distinction, always making relief to the impotent easier to claim while simultaneously imposing sanctions against vagrancy. The formalising legislation of 1597 and 1601 was primarily designed to repress vagrancy whilst preserving the impotent poor as proper objects of relief.23 The 1834 Poor Law Amendment Act attempted to restore the Poor Law to virtue and re-establish the distinction between the impotent and the able-bodied. Relief to the able-bodied was seen by Nassau Senior as 'the source from which all their other abuses have flowed'.24 Hence the 1834 Report paid little attention to the impotent poor, and virtually no recommendations were made in regard to their treatment. It declared: 'No use can be made of the labour of the aged and sick, and there is little room for jobbing if their pensions are paid in money. Accordingly, we find that even in places distinguished in general by the most wanton parochial profusion, the allowances to the aged and infirm are moderate.'25 The Report recommended that in future paupers should be classified according to a fourfold division: the aged and really impotent; children; able-bodied females; able-bodied males. The offer of the workhouse would be the 'self-acting test' that would enable officials to make the judgement of deservingness.26 The 1834 Report recommended that the workhouse regime for the 23 24

25

26

The Poor Law Report of 1834 (ed. S. a n d O. C h e c k l a n d , 1 9 7 4 ) , p p . 7 3 - 8 1 . Quoted in Peter Dunkley, The Crisis of the Old Poor Law in England, 1795-1834: An Interpretative Essay ( 1 9 8 2 ) , p. 9. Quoted in H e l e n Fisher H o h m a n , The Development of Social Insurance and Minimum Wages Legislation in Great Britain ( 1 9 3 3 ) , p. 4 2 . Poor Law Report, p. 3 7 8 .

34

The campaign for old age pensions

aged and infirm should be less rigorous than for the able-bodied: the workhouse should be a place where 'the old might enjoy their indulgences without torment from the boisterous', whereas the able-bodied should be 'subjected to such courses of labour and discipline as will repel the indolent and vicious'.27 If possible, the aged were to be placed in specialised institutions. Partly this was because of widely held views that their poverty was less culpable than that of the young able-bodied male's. Old age was an inevitability over which the individual had no control: as Charles Booth remarked later, it was 'not to be avoided by any fear of penalty, nor liable to increase if the troubles they [the aged] bring are softened'.28 Partly it was because of the inherent difficulty of peering into a past life and adjudicating on the question of 'deservingness'. Partly it was because of the view that has pertained throughout the history of all social security systems: because old people have marginal relevance to the labour market, they need not be subject to punitive sanctions. But lenient treatment of old people was also cheaper. It was one of Chadwick's fatal mistakes not to have realised that, in a system largely financed by ratepayers, motives of economy would prevail such as to weaken the principles of less eligibility and the workhouse test. Even the building of general mixed workhouses - let alone specialised ones - was a slow process after 1834, because of their cost. Quite simply, it was less expensive to pay aged applicants (and other 'deserving' groups, such as widows) small sums in outdoor relief, and allow them to remain in their own homes, than to disrupt their lives and force them to live in workhouses; for an old person, such workhouse residence would be likely to become permanent, and thus the cost to the Poor Law would be far greater.29 The constraints of economy thus guaranteed reasonably lenient treatment: outdoor relief, in Gilbert Slater's laconic verdict, combined 'the maximum of humanity consistent with minimum cost'.30 For all these reasons, outdoor relief flourished after 1834, even being formally sanctioned in the case of the aged and infirm by the 1842 General Prohibitory Order. In theory, the 'offer of the house' continued as the deterrent device aimed at encouraging support of the aged by family, friends and neighbours; in practice, outdoor relief was disbursed in the form of small supplements to earnings. From 1847, Guardians 27 28

29

30

Ibid., p. 430. Charles Booth, Pauperism, a Picture: And the Endowment of Old Age, an Argument (1892), p. 154. Some conservatives argued that outdoor relief was a false economy, since it only encouraged further demands. See evidence by J. S. Davy, Royal Commission on the Aged Poor, vol. II, p. 120. Gilbert Slater, Poverty and the State (1930), p. 220.

The nineteenth-century background

35

could allow aged couples to have shared rooms in the workhouse rather than being separated in male and female dormitories; but few implemented this, as it was expensive. Of course, generalisations about Poor Law policy after 1834 have limited value, as there continued to be enormous local variations of practice. In some Unions, outdoor relief would be easily obtained by the aged and infirm, and on quite a generous scale; the workhouse regime would be liberal and humane, such as the 'Brabazon system' operated in Battle (Kent) where local ladies came in and taught the aged inmates the skills of sewing, knitting, wool-work, carpentry, and so on. In others, virtually all relief would be provided within the workhouse, and then it would be punitive in nature (for example, separating old couples) though stone-breaking and coarse oakum picking were never supposed to be applied to aged paupers. In between, there existed a wide range of practices. Contemporary opinion offered different explanations for these variations in relief practices. As we shall see, Charles Booth found them baffling. To the Charity Organisation Society, they reflected the relative strictness or laxness of Boards of Guardians. Others perceptively realised that outdoor relief availability was related to the demands of the local economy, and the need to sustain each area's reserve army of labour: Thomas Mackay pointed out that outdoor relief tended to be more easily available in agricultural regions in order to help farmers employ labour more cheaply (particularly at key moments in the annual cycle, such as harvests).31 Thus Derek Fraser has observed that, in rural areas, Boards of Guardians would consist of farmers, landowners and the local gentry, and accordingly 'wage rates and Poor relief were manipulated in the interests of farmers to maintain an adequate supply of labour to meet the highest seasonal demands'.32 Whatever the conditions for outdoor relief, evidence collected by Charles Booth in the 1890s confirms the obvious that the prospect of indoor relief in the workhouse acted as an effective deterrent until the point when the destitute aged person knew there was no alternative and accepted the inevitable: The labouring folk regard the 'House' with great aversion . . . Outdoor relief, on the other hand, is considered, more or less, as the natural and inevitable source of support when earnings fail. But even outdoor relief is not applied for till it is the last resource; the labourer will work and keep himself till he can work no longer. 31 32

T h o m a s Mackay, Methods of Social Reform ( 1 8 9 6 ) , p . 1 8 1 . D e r e k Fraser, ' T h e English P o o r L a w a n d t h e Origins of t h e British Welfare S t a t e ' , in W. J. Mommsen (ed.)5 The Emergence of the Welfare State in Britain and Germany,

1850-1950 (1981), p. 26.

36

The campaign for old age pensions

For example, in Oxham (Cambridgeshire) there was 'intense abhorrence of the workhouse. The old people do not feel that they have done anything to deserve being "locked up". One says, "I would rather be hung than go in again".' Likewise, in Satterly outdoor relief was 'regarded as almost a right, but only asked for as a last resource'. 33 The amounts paid in outdoor relief to the aged in the late nineteenth century ranged, for a single person, from Is 6d to 4s Od per week, and, in a very few cases, even 5s Od or 6s Od per week. (These are the figures given in evidence by numerous witnesses to the 1893-5 Royal Commission on the Aged Poor.) The average amount seems to have been about 2s 6d (lower in rural areas than in urban), and would be regarded as a supplement to other sources of income (i.e. casual work, savings, charitable help or contributions from family).34 In the 1890s, Charles Booth found that, in rural areas, the amount paid to an aged person in outdoor relief was 'usually about 2s 6d a week, seldom falling below 2s Od or rising above 3s Od'.35 As E. H. Hunt has put it, such Poor Law 'pensions' were 'disability supplements intended to offset the diminishing market value of men no longer able to earn their keep but not yet sufficiently feeble to warrant full support'. 36 The dilemma for Guardians was that such supplements had to appear not to be allowances in aid of wages, for fear of raising the spectre of Speenhamland. For example, when giving evidence to the 1895 Royal Commission on the Aged Poor, the Local Government Board Chief Inspector, William Knollys, testified that the general amount given to the aged in outdoor relief was 2s Od to 3s 6d (single) and 4s Od to 6s Od (married). This was not in aid of wages, he said, but merely a supplement to 'earnings' - defined by Knollys, in a feat of intellectual contortion, as 'some means of an uncertain character which old people would be able to pick up, and would be entirely distinct from continuous wages'. Again, a representative of St Pancras Union testified that the maximum paid there was 4s Od: it was expected that this would be supplemented, and the minimum an old person should live on was, he judged, 7s Od per week.37 Such official hypocrisy was highly convenient: the blanket assumption by Boards of Guardians that outdoor relief was only a supplementary income was partly a logical reflection of the availability of paid employ33 34

35 37

Charles Booth, The Aged Poor in England and Wales (1894), pp. 3 8 3 , 4 0 0 , 4 1 1 . For a discussion, see E. H. Hunt, Taupers and Pensioners: Past and Present', Ageing and Society, vol. 9, pt. 4, Dec. 1989, pp. 4 0 7 - 3 0 , which is a trenchant reply to David Thomson, "The Decline of Social Welfare: Falling State Support for the Elderly Since Early Victorian Times', Ageing and Society, vol. 4, pt. 4, Dec. 1984, pp. 4 5 1 - 8 2 . 36 Booth, The Aged Poor, p. 3 4 1 . Hunt, Taupers and Pensioners', p. 4 1 5 . Royal Commission on the Aged Poor, vol. II, pp. 43, 52, 130.

The nineteenth-century background

37

merit for older workers (albeit often casual or part-time) , but it was also designed to force the aged to seek out all possible sources of income, and to reinforce filial support. It is clear from the evidence that the late nineteenth-century aged had very diverse sources of income, often several being combined. For example, Charles Booth's meticulous researches in The Aged Poor in England and Wales showed that old people in rural areas had five principal sources of income - the Poor Law (the 'parish'), charity, relations, earnings and means - but the mixture of these sources could be complex. Despite the official inducements, it was very difficult for children to support their aged parents when they themselves were struggling to raise a family on agricultural wages: thus only 5.3 per cent of aged were solely supported by relations. The proportion of aged whose income was solely from earnings was 24.4 per cent; but another 24.5 per cent had earnings plus one or more of the other sources of income, making a total of 48.9 per cent wholly or partly dependent upon earnings. A mere 5.0 per cent were solely dependent upon the Poor Law, but another 17.0 per cent had income from the Poor Law plus other sources, making a total of 22.0 per cent wholly or partly dependent upon the Poor Law. The earnings of men aged 65+ in these rural areas were, not surprisingly, low: 41 per cent earned less than 10s Od per week, and 90 per cent of them less than 16s Od per week (which was a good agricultural wage). 38 The 1895 Report of the Royal Commission on the Aged Poor criticised the tendency of Guardians to underpay, and noted that there were many cases where outdoor relief was provided in amounts which are, even when added to other resources of which the Guardians have knowledge, inadequate for the maintenance of the recipients, under the belief that the allowances are sure to be supplemented from other sources, which often exist even though they are not brought before the Guardians. It recommended that relief should be 'adequate to meet fully the extent of destitution'.39 In the six decades after 1834, outdoor relief payments slowly declined. Thus although in the short term the 1834 reform was a failure (in that outdoor relief was not immediately abolished), in the long term it must be viewed as something of a success. The cost of the Poor Law per head of population fell from 7s 2lA& in 1848 to 6s Id in 1892; the rate of outdoor pauperism fell from 55 per 1000 total population in 1849 to 19 per 1,000 in 1892; the rate of'not able-bodied' pauperism fell from 19.6 38 39

Booth, The Aged Poor, pp. 3 4 4 - 5 . Report of the Royal Commission on the Aged Poor, vol. I, pp. x, lxxxiv.

38

The campaign for old age pensions

per 1,000 population in 1862 to 12.0 in 1892. And the proportion of all paupers who were 'aged and infirm' rose from 16 per cent of all paupers in 1802-3 to 48 per cent in 1901, indicating that the able-bodied were being squeezed out: though the population of England and Wales rose threefold, the number of able-bodied unemployed males on relief was ten times less by the latter date. 40 In short, up to the 1890s the rate of pauperism was falling, albeit at different speeds for different groups. Such statistics of progress were tellingly used by leaders of the Charity Organisation Society to argue that state pensions were not needed. This process of 'de-pauperisation' accelerated after 1871, with the newly formed Local Government Board's 'crusade against outdoor relief - an attempt to tighten up administration of the Poor Law, and (in some cases, in alliance with the Charity Organisation Society) implement a 'back to 1834' policy. The origins of this campaign lay in the crisis felt by the governing class in the late 1860s over the temporary increase in the rate of pauperism - a 'welfare crisis' which also reflected the political crisis of the late 1860s (and is dealt with fully in a future chapter). It was essentially a crusade against the able-bodied, but its precepts were held to apply also to the aged and policy towards them was made stricter. Viewed in the longer term, this change of official policy at the end of the nineteenth century must be placed in the context of two key influences: the urgent need to discipline the able-bodied male; and an apprehension over the democratisation of relief, particularly with the rise of socialism.

The Poor Law dependency of the aged If we examine the late nineteenth-century Poor Law, we find a paradoxical situation: the aged were a major client group of the Poor Law, and thus needed to be lifted off outdoor relief if the Poor Law was to be restored to its 1834 strictness and impose harsher discipline on the young able-bodied males; yet the new concern over old age poverty emerged at a time when old age pauperism was declining. For most of the nineteenth century, empirical evidence on old age pauperism per se was unobtainable, since all paupers aged 60+ were placed in the broad category 'aged and infirm'. It was impossible to ascertain how many of these owed their pauperism solely to old age. In 1890, however, the evidence was collected in the form of'Burt's return', showing that, on a 'one-day count', 19.5 per cent of the 65+ population (16.0 per cent of males and 18.9 per cent of females) were on Poor Law 40

Karel Williams, From Pauperism to Poverty (1981), pp. 4 0 - 1 .

The nineteenth-century background

39

Table 2.2. Poor Law dependency by age, England and Wales Under 16

16-65

Over 65

10,762,808

16,867,116

1,372,601

77,415

63,352

0.5

4.6

205,045 14.9

Total population of England and Wales Pauper population, one-day count (Burt's return): Indoor paupers (a) Number 51,611 0.5 (b) Percentage Outdoor paupers (a) Number (b) Percentage

177,567

125,756

1.6

0.7

Total (a) Number (b) Percentage

229,178

203,171

2.1

1.2

Pauper population, twelve-month Count (Ritchie's return): Indoor paupers 232,284 (a) Number 111,782 1.4 1.0 (b) Percentage Outdoor paupers 385,299 441,805 (a) Number 2.3 4.1 (b) Percentage Total 617,583 (a) Number 553,587 3.7 5.1 (b) Percentage

268,397 19.5

114,144 8.3

287,760 21.0 401,904 29.3

Source: Report of the Royal Commission on the Aged Poor, 1895, vol. I, C-7684, p. xii.

relief at any one time (indoor and outdoor), compared with only 1.6 per cent for the age group 16-65. In 1892, more detailed information was available, in the form of 'Ritchie's return'. This took two counts: a oneday count on 1 January 1892; and a twelve-month count ending on Lady Day 1892. The full results are shown in table 2.2. Burt's return also showed how pauperism increased in old age. Of those aged between 60 and 65, 5.3 per cent were paupers; of those aged 65-70, 10.9 per cent; of those 70-75, 18.5 per cent; of those 75-80, 26.1 per cent; and of those 80 and over, 30.0 per cent. In addition, Charles Booth estimated that, if one isolated the working class and small traders, something like 40-45 per cent of those aged over 65 were paupers at some point in the course of a year. Because of the lack of statistics of old age pauperism per se prior to 1891, estimates of the fall in its rate before the 1890s were somewhat conjectural. Several attempts were made, by excluding lunatics, vagrants

40

The campaign for old age pensions

Table 2.3. Rates ofpauperism by age, England and Wales Year

Percentage of paupers under 16 to population under 16

Percentage of paupers 16-59 to population 16-59

Percentage of paupers 60+ to population 60+

1861 1871 1881 1891 1901 1905

4.2 4.5 2.7 2.2 1.9 1.9

2.0 2.2 1.3 1.0 0.80 0.98

21.6 21.7 15.2 14.0 13.8 14.7

Source: C. S. Loch, Statistics of Population and Pauperism in England and Wales', Journal of the Royal Statistical Society, vol. 69, pt. II, June 1906, p. 292.

and children from the category of 'not able-bodied'. One by Spencer Walpole in 1898 calculated that the rate of pauperism among the population aged 60+ had fallen from 25.7 per cent in 1861 to 16.9 per cent in 1891. 41 Another slightly different estimate was published by C. S. Loch and is shown in table 2.3. Both of these estimates suggested that, whereas old age pauperism had steadily declined since the 1860s, its rate of decline had been slower than that for other groups and had largely ceased by the end of the nineteenth century. Relatively speaking, the aged were a growing obstacle in the way of Poor Law reform. From the 1870s onwards there were increasing concerns that the Poor Law was failing in its historic aim of maximising the productivity of labour by disciplining the ablebodied male, whose industrial behaviour was increasingly seen as the key to the revitalisation of British capitalism in a new era of international economic competition. The removal of those categories of pauper largely irrelevant to the labour market (the 'impotent') was an essential precondition of successfully implementing a 'back to 1834' policy. If the young and the old were removed, the burden of clientage would be reduced by over two-thirds. Hence there appeared proposals such as 'boarding out' children in cottage homes as a humane alternative to the workhouse. In the case of the aged, two alternative policies were suggested: either more generous outdoor relief (with perhaps no aged paupers being required to enter the workhouse); or a system of income support so distinct from the Poor Law that a 'back to 1834' policy could be easily implemented - that is, a system of state old age pensions. (A third policy - that of braving the situation out, doing nothing, and 41

Report of the Committee on Old Age Pensions, C-8911, 1898, Appendix I, p. 20.

The nineteenth-century background

41

continuing to reduce outdoor relief - was the policy of the Charity Organisation Society, and will be dealt with fully in a future chapter.) Official policy swithered between these two possibilities. The push from the Local Government Board bureaucrats after 1871 was to apply the doctrine of less eligibility to the aged, with the 'offer of the house' as the only alternative. But presidents of the Local Government Board no doubt more sensitive to political pressures - tended to contradict this: for example, in 1885 Arthur Balfour issued a circular reminding Guardians that married couples aged over 60 had a statutory right to their own bedrooms, and need not be separated; again, in 1891, Charles T. Ritchie sanctioned the provision in the workhouse of newspapers and books for the aged; this was followed in the 1890s by orders allowing tobacco, snuff, tea, coffee and cocoa. The 1895 Report of the Royal Commission on the Aged Poor concluded that workhouses were not appropriate places for old people, and in response another Local Government Board President, W. Shaw-Lefevre, issued a circular recommending that outdoor relief should be easier to claim for those aged who had led thrifty and independent lives. Boards of Guardians did not necessarily pay much attention to these instructions, but they were very revealing of the Poor Law's growing dilemma. By the 1890s, Poor Law policy towards the aged was falling into some confusion. By the end of the nineteenth century, therefore, it was clear that the Poor Law could only be restored to its 1834 strictness if the aged were somehow removed. Most early advocates of old age pensions thus envisaged them as an essential precondition of a tightened-up Poor Law. Canon Blackley's aim was to cut the cost of the Poor Law by one-half, and at times he spoke of its complete abolition. Joseph Chamberlain more subtly realised that public opinion would not permit 'back to 1834' Chadwickian reforms to be applied to the aged pauper. 'If you turn the screw much more there will be an outbreak', he warned. There would be deaths from starvation, and this 'would quickly produce a popular agitation against the whole system'. On the other hand, if the old were removed, 'we should then justify an even more stringent administration of the present Poor Law, and should meet the prejudice which rightly or wrongly now exists, on the ground that the old are treated with considerable hardship'.42 Likewise, Charles Booth opposed any moves to make outdoor relief easier for the aged to claim, and declared: 'It is an integral part of my plan that, concurrently with the 42

Royal Commission on the Aged Poor, vol. Ill, pp. 653, 657; Letter from Chamberlain to C. S. Loch, 26 Nov. 1891, published in The Charity Organisation Review, vol. 8, no. 86, Feb. 1892, p. 37.

42

The campaign for old age pensions

establishment of pensions in old age, out-relief under the Poor Law should be abolished.'43 Booth acknowledged that such reform of the Poor Law would be very difficult to achieve, but it was 'a task that would be immensely lightened if the old people were withdrawn from it' by a system of pensions. In euphemistic terms (possibly because he was on this occasion speaking at a socialist meeting), Booth outlined the desirable state of affairs that would follow: We should then, I think, be able to divide those to whom relief is still necessary into far more definite classes, treating each class suitably, and I think we should be able to make very considerable economies, but above all we should have a much more efficient system - one in which there would be much less waste of expenditure than there is now.44 Such views were held across a wide range of liberal-reformist (but not socialist) opinion in the 1890s. There was widespread praise for the 1834 reform, and considerable apprehension that a socialist Poor Law would bring back the 'lax' administration that prevailed before 1834. Thus Professor Alfred Marshall roundly condemned 'the ruinous folly of the Old Poor Law; which was perhaps the most serious danger with which England has ever been threatened'.45 But Marshall had other enemies: to Thomas Mackay he confessed that 'I think that after the Old Poor Law the Independent Labour Party is the greatest danger of the present century; both being powerful engines for preventing people from making the best of their abilities.'46 Marshall thus mapped out two possible survival strategies in the face of the socialist threat. First, to liberalise the dispensing of outdoor relief to 'the thrifty, the prudent and the upright . . . and thus to enlist the conscience and the reason of the best of the working classes on the side of prudent and careful reformation'. The second, wholly unwise strategy, would be to turn a deaf ear to these working-class complaints, 'and thus to make it likely that when working class rule, already near at hand, has actually arrived, no patient hearing will be given to the advocates of moderation in the use of outrelief'.47 Another fearful soul was Sidney Webb, who likewise admired the 'bracing system' introduced into the Poor Law in 1834. The abolition of 43 44

45

46

47

Charles Booth, Old Age Pensions and the Aged Poor: A Proposal (1899), p. 49. Quoted in Francis Herbert Stead, How Old Age Pensions Began to Be (n.d., c. 1910), p. 44. Alfred Marshall, ' T h e Poor Law in Relation to State-Aided Pensions', Economic Journal, vol. 2, March 1892, p. 186. Quoted in A. M. MacBriar, An Edwardian Mixed Doubles: The Bosanquets versus the Webbs: A Study in British Social Policy 1890-1922 (1987), p. 69. Alfred Marshall, 'Poor Law Reform', Economic Journal, vol. 2, June 1892, p. 375.

The nineteenth-century background

43

outdoor relief to the able-bodied male was now 'virtually complete', but the existence of 'deserving' groups like the aged on outdoor relief hindered the continued work of de-pauperising the working class. Lifting the aged off the Poor Law by a state pension scheme would reinvest the concept of 'pauperisation' with a clear meaning, and hence assist in the arduous task of remoralisation. Thus, for Webb, the object of a state pension scheme was 'not so much the comfort of the individual pensioner as the stoppage of the degradation and demoralisation of the existing pauper class'. By judicious reforms such as state pensions, the rising popular demand for radical reform of the Poor Law could also be pre-empted: 'To be able to head off the crowd from a dangerous course the statesman must, from the outset, be continually leading them towards the same end, but by safe paths'.48 Given that the aged enjoyed public support as axiomatically 'deserving', then the continued democratisation of the Poor Law could lead to a series of liberalising policies which would grant generous outdoor relief as of right. As Joseph Chamberlain said: 'There is no agitation which I think would be more dangerous, and of which I have greater fear, than an agitation in favour of something like widespread out-door relief'.49 By the 1890s, there were also growing concerns that some citizens were taking the view that, because they had paid rates all their lives, they were then automatically entitled to outdoor relief in old age. Alfred Marshall observed in 1892 that the working class were: learning with astonishing rapidity that a man who has not grossly misconducted himself and has to the best of his ability saved and made provision against adversity, has an equitable claim to receive back in case of need part of what he has contributed to the Poor-rates.

Marshall pointed out that working-class political leaders were increasingly taking this view and popularising it; he thought that they were justified in so doing.50 (As with so much of the liberalism of the 1890s, Marshall's approval was merely a bowing to the inevitable.) Likewise, a member of the 1893-5 Royal (Aberdare) Commission commented, of the Poor rate, 'There are some who think that it is in the nature of an insurance contribution by the ratepayer against his or her own old age',51 48

49 50 51

Sidney Webb, ' T h e Reform of the Poor Law', Contemporary Review, vol. 58, July 1890, pp. 97, 1 0 7 - 8 , 120. Royal Commission on the Aged Poor, vol. Ill, p. 660. Marshall, 'Poor Law Reform', p. 374. Comment by A. C. Humphreys-Owen, Royal Commission on the Aged Poor, vol. II, p. 86.

44

The campaign for old age pensions

and Charles Booth was to warn that, by the 1890s, outdoor relief was 'often claimed very much as a right'.52 This fear was to grow after 1894, when the conditions for standing as a Poor Law Guardian were considerably relaxed: the Local Government Act of that year lowered the property qualification for election to, and membership of, Boards of Guardians, from £40 annual value to £5. By the 1900s, a growing number of Boards of Guardians were dispensing outdoor relief to the aged as a right, thus seriously undermining the concept of 'deservingess'. In short, desert was replacing destitution as the criterion for eligibility. If this were extended to the able-bodied (say, by new socialist Boards of Guardians in urban areas), then the entire deterrent basis of the Poor Law would be destroyed. However, lifting the aged off the Poor Law and on to a system of pensions would erode the legitimacy of any future attempts by working-class, socialist Boards of Guardians to liberalise outdoor relief, since the client group arousing most public sympathy would have been removed. By the end of the nineteenth century, therefore, the problem of remoralising and disciplining the young able-bodied male worker, and hence assisting the revitalisation of British capitalism, was giving rise to a lively debate about whether the Poor Law should be replaced by a system of state old age pensions. This debate was rendered all the more urgent by the significant changes that were taking place in the structure of the labour market. The marginalisation of older workers We can see clearly the beginning of the marginalisation of older workers if we examine the structure of the late-Victorian labour market in both its rural and urban contexts. Unfortunately, official 'blue book' reports offer little help to the historian, and so this section will rely on the observations of several well-informed and concerned contemporaries. As a linguistic construct, the 'worn-out' worker requires sensitive analysis, and further discussion will be conducted in future chapters. Deciding how 'representative' such testimonial source material is can be a problem, but what strikes anyone diligent enough to read the contemporary sources is how much agreement there was - from a great diversity of observers, but especially from trade unionists who were closest to what was happening - that jobs for older workers were disappearing with the emergence of a new kind of capitalism. Living standards generally had risen over the past fifty years, it was agreed: the 52

Booth, The Aged Poor, pp. 330-1.

The nineteenth-century background

45

rate of outdoor pauperism was in decline, working-class saving was increasing, wages were higher, death-rates were falling, and so on. But the lot of the aged had grown worse relative to the rest of society. Typical of this concern was William Sutherland's verdict: A better system of sanitation and municipal government generally, increased medical skill, more temperate living, better wages during working years - all these things have tended to extend the life of the working classes; while, at the same time, the increased pressure at which modern industry is run has made it more difficult for the aged to obtain employment.53

In 1899 the journalist Vaughan Nash pointed out that life expectancy was rising, yet the period of earning was shortening. Fewer and fewer jobs were available for older workers, he noted. In addition, the spread of joint-stock companies and more 'scientific' management techniques had resulted in a more impersonal relationship between capitalist and employee, in which the old fared badly: no longer would they be kept in work for sentimental reasons. Wrote Nash: 'With the day of the industrial athlete, who must always be at the top of his training to keep pace with the swing of the workshop that is racing against the world, there has come the final break-up of human relations between employers and workmen.'54 From a different background was the Poor Law Guardian M. J. Cole, who observed such changes taking place in the mining industries of his home area, Cannock. Overall prosperity had increased in the past fifty years, but the relative condition of the aged had worsened; thus pensions were needed, and the rise in wealth meant that they could be funded. Like Nash, Cole argued that the working life had been shortened: he attributed this to the recent Workmen's Compensation Act, which made joint-stock companies unwilling to keep on employing older men because they were becoming industrial liabilities. 'Younger men were forcing out their elders, and this was a very serious matter', commented Cole. 55 A similar analysis was offered at some length by John Metcalfe, in The Case for Universal Old Age Pensions (1899). Metcalfe noted that new inventions in machinery, requiring specially skilled men, were displacing workers who, if they were middle-aged, found little chance of obtaining anything other than low-paid labouring jobs. The worsening condition of the aged was directly the result of increasing mechanisation in 53

54

55

William Sutherland, Old Age Pensions: In Theory and Practice With Some Foreign Examples (1907), pp. 2 2 - 3 . Vaughan Nash, 'The Old-Age Pensions Movement', Contemporary Review, vol. 75, JanJune 1899, pp. 4 9 7 - 8 . Poor Law Conferences Held in the Year 1899-1900 (1900), p. 22.

46

The campaign for old age pensions

industry. 'What we respect and venerate is not old age in itself, but old age that can claim to be superior to youth in either judgement or independence', he wrote; now that new technology was eroding their previous judgemental superiority, born of experience at the workplace, the aged were losing their venerated social status. Metcalfe was bemused by the relative powerlessness of human agents to reverse these trends: the new economic imperatives necessitated that a large jointstock company had to be ruthlessly competitive and shed older, inefficient workers: 'A manager with a lot of hungry shareholders on the one side, and the fierce competition of rival firms on the other, is helpless, whatever his character or personal feelings may be'. 56 This view was held right across the political spectrum. As will be shown in a future chapter, by the 1890s socialists were becoming increasingly concerned about what was happening in the labour market. Thus in 1899 Keir Hardie called for old age pensions to support older workers who were being displaced because 'the limit of the age of employment is being so much reduced in large industrial establishments'; and others expressed disquiet over the plight of the 'worn-out' older worker.57 At the 1906 TUC Annual Conference George Barnes (of the Amalgamated Society of Engineers) introduced a motion calling for universal, tax-funded old age pensions of at least 5s Od per week, payable from the age of 60, to ameliorate 'the hard lot of the worn-out workers'; the working life had become more intense in the last twentyfive years, said Barnes: 'There had been a speeding-up and a hustling-up in the workshop, and the result of such intensification had been that the old man was unable to keep up with it, and was put on the industrial scrap-heap at an earlier age than was the case before.'58 Much of the pro-pensions socialist literature of the early 1900s is replete with anxieties about the effects of new technology in displacing older workers. Unless supported by the state, these unemployed older workers would form a growing reserve army of labour that would compete with younger workers and force down wages. This concern was to grow and become the basis for the labour movement's demand for retirement pensions in the inter-war years. But among industrialists and political conservatives a similar realisation was developing. One interesting later example of this - in the form of a soothing political bromide - is Stanley Baldwin's famous 'peace in 56 57

58

John Metcalfe, The Case for Universal Old Age Pensions (1899), pp. 1 3 - 2 3 , 3 3 . Independent Labour Party. Report of the Seventh Annual Conference, 1899, p. 29. For the 'worn-out industrial worker', see: Independent Labour Party. Report of the Fourteenth Annual Conference, 1906, p. 41, and George Barnes, From Workshop to War Cabinet (1924), pp. 4 5 - 6 . Report of Proceedings of the Thirty-Ninth Annual Trades Union Congress, 1906, p. 146.

The nineteenth-century background

47

our time' speech of 6 March 1925 in the House of Commons. Baldwin reminisced back to his youth in his father's small family firm - the type of enterprise that was already passing: it was a place where nobody ever 'got the sack', and where we had a natural sympathy for those who were less concerned with efficiency than is this generation, and where a large number of old gentlemen used to spend their days sitting on the handles of their wheelbarrows, smoking their pipes. The firm was 'the last survival of that type of works which ultimately became swallowed up in one of those great combinations towards which the industries of today are tending'. But already, Baldwin went on, there was emerging 'a new state of industry', marked by the squeezing out of small firms, more ruthless business organisation, employers' cartels opposing trade unions, and greater alienation between capitalist and worker. In a moment of unintentional economic determinism, Baldwin argued that there was nothing that could be done about this tendency, 'because it comes largely, if not principally, from that driving force of necessity in the world that makes people combine together for competition and for the protection they need against competition'.59 Two points need to be noted. First, some observers regarded the 1897 Workmen's Compensation Act as a 'cause'. In the late 1890s and early 1900s many trade union leaders blamed it for greatly hastening the displacement of older workers. As the Leeds Mercury of 30 December 1898 put it: 'In trades in which the workman's immunity from accidents largely depends upon good eyesight, manual dexterity, and robust physical health, the employer is naturally reluctant to engage any workman who may, by reason of age, or some trifling infirmity, fall below this high standard of physical fitness.'60 But the effects of the Act must have been marginal. It only offered compensation where it could be proved that the accident had not been caused by the worker's negligence; it was difficult and expensive for trade unions to fight such cases in the courts where an employer refused to admit liability. Again, the Act only covered a limited range of industries and certain strictly defined hazards. Its inadequacies were such that the labour movement made reform of workmen's compensation a priority, and succeeded in persuading the Liberal government to introduce an improved scheme in 1906.61 Disliking the Act greatly, they were thus probably over-inclined to cast it in the role of villain. The 1897 Act was not in any way a prime cause of the displacement of older workers: rather it was itself a product 59 60 61

Stanley Baldwin, On England, And Other Addresses (1926), pp. 4 2 - 4 . Quoted in Metcalfe, The Case, p . 3 1 . P. W. J. Bartrip, Workmen's Compensation in Twentieth Century Britain (1987), ch. 2.

48

The campaign for old age pensions

of the shift to a late-industrial capitalism that required a younger, more skilled workforce. Second, the growing displacement of older workers was often rationalised into a conclusion that the objective health status of older males was worsening; but this was not necessarily the case. A striking example of this misunderstanding took place when Charles Booth gave evidence to the Aberdare Commission. Booth argued that in 'modern industry generally' it was harder for the aged worker to find work. Lord Aberdare was puzzled by this: he thought Booth was saying that old men were no longer fit enough to survive the new stresses of industrial life; how could this be, since living standards had improved, and work was becoming more technology-dependent, and thus lighter?62 The answer was that the new economic conditions of the 1890s made the older worker appear less 'fit' to meet the challenges of industry. Paradoxically, from the 1890s onwards - as the health status and working capacity of older male workers steadily improved - so were they increasingly seen as 'worn-out' 'veterans of industry' who now deserved a 'well-earned rest'. The social observers' perception of decreasing working capacity was thus a reflection of the fact that demand for the labour of older males was diminishing, and this was lowering their economic status relative to the rest of society. In addition, as a subsequent chapter on the friendly societies will show, older workers were becoming more inclined to define themselves as 'worn-out' in relation to shrinking job opportunities: hence the paradox, still puzzling to historians, that friendly society sickness benefit claims were rising at a time when overall health status was improving.

Charles Booth on the crisis of the older male worker The most systematic qualitative analysis of what was happening to the older industrial worker was provided by Charles Booth, in The Aged Poor in England and Wales, and in the five-volume 'Industry Series' of his classic Life and Labour of the People in London. Booth's interlinked twin concerns of Poor Law reform and the need for greater industrial efficiency were magnificently combined in The Aged Poor in England and Wales. At first sight, this thick volume appears to deserve the verdict of his wife that it was 'very dull. There was little to enliven the mass of statistics which composed a large part of it'. 63 62

63

Royal Commission on the Aged Poor, vol. Ill, p. 580. See also Beveridge, Unemployment,

pp. 116-24. Mary Catherine Booth, Charles Booth, a Memoir (1918), p. 143.

The nineteenth-century background

49

However, on closer inspection the density of information in it yields many fascinating clues on what was happening to older workers. The Aged Poor was a study of 285 out of the 648 Poor Law Unions in England and Wales, based upon responses to a questionnaire issued by Booth (completed by local clergy), 'Ritchie's return' of 1892, and the 1891 census. Booth's aim was to examine the practices of different Poor Law Unions in their treatment of the aged, to construct some general hypotheses from this information, and to relate Poor Law policy to the structure of the local economy. There were technical difficulties involved in this undertaking (such as the fact that terms like 'employment' and 'thrift' did not necessarily have consistency of meaning), but the results were nevertheless very instructive. Booth concluded that, even under identical social conditions, variations of Poor Law policy towards the aged were so marked as almost to defy analysis. This conclusion actually reflected Booth's unwillingness to investigate the particular demands of the local economy in each Poor Law Union; it led him to argue that such inexplicable anarchy would make it impossible to re-establish a tightened-up, 'back to 1834' Poor Law unless the aged were lifted off outdoor relief completely and supported by a system of state old age pensions. Nevertheless, a rough typology could be constructed: on the one hand were those geographical areas in which the aged still had plentiful employment opportunities (with, as a consequence, low proportions of them on outdoor relief); on the other hand were those areas where employment opportunities were disappearing and support by outdoor relief was greater. In general, rural areas with a labour-intensive, predominantly agricultural base offered aged workers a myriad of casual or light employment opportunities and thus they could continue working to extreme old age. Employer-employee relations tended to be paternalistic, Poor Law relieving officers would know their aged clients well and rural communities were tightly knit places where the socially unfortunate were looked after - providing that they knew their place. Booth wrote: 'In village life the old are, and are felt to be, a common burthen - a burthen on the community. Ties of blood and ties of friendship make a network of support on which the aged poor rest, irrespective of such private or public charity as may be available in addition.'64 In rural areas the proportion of old people was higher than average: younger workers had migrated to urban industry, and the old thus experienced less competition for available work. Population density was also low. At the other extreme, those areas with the highest proportions of aged 64

Booth, The Aged Poor, p. 357.

50

The campaign for old age pensions

people on outdoor relief were urban conurbations with new industries. Such areas had high population densities and growing populations, marked by constant in-migration of young workers from the surrounding countryside. These younger workers competed with the old for jobs, and thus displaced them. Urban employers also felt no sentimental or community-sanctioned obligation to retain older workers. And, most important of all, the new industrial enterprises developing in cities used innovative technology which - apparently - the old could not master. The Aged Poor provided summaries of many different Poor Law Union practices, all adding up to a picture of enormous detail. From these, a few illustrative examples will suffice. All highly rural areas provided considerable employment opportunities for older workers. Thus in the villages in Hemel Hempstead Poor Law Union aged men were retained on farms 'as long as possible, on wages from a few shillings for minding sheep or trimming hedges, etc., to 14s 6d or 15s Od as carters, etc. Some, unfit for other work, are employed by surveyors on roads.' Glanford Briggs (Lincoln) was also typical of rural areas: 'the parish is entirely agricultural, and work is plentiful; most over 65, if in good health, earn something'.65 Likewise, at Brampton (Cumberland): 'for the men chiefly agricultural labour, e.g. turnip and potato hoeing, hedging, harvest work, stone-breaking. For most of this they receive children's wages or food only.'66 The southern areas of England contained prime examples of antiquated, labour-intensive agricultural methods. Thus in the south there were generally 'few places where the old cannot get employment of some kind, either by continuing their usual occupation or by doing light occasional work'. For example, in Mailing (Kent), old men and women performed 'chiefly field work. Fruit, nut, and hop plantations in Kent give a good deal of employment to the elder poor'. 67 In rural society, the division of labour among older workers was highly gendered. There was a clear understanding of 'men's work' and 'women's work', the latter being domestic and/or caring in nature. For example, in Hoxne (Suffolk), 'Old women go charring (9d or lOd a day and keep), and washing (Is Od a day). Old men get jobs of gardening, work on roads, or other people's allotments for about Is 6d a day. Many instances of farmers employing old men past their work.'68 In Stockton, old women acted as housekeepers to widowed miners with children and did some light field work in harvest time; in Gateshead 'females able to sew, wash and clean can get two or three days' work a week (at Is 6d to 65 67

Ibid.,pp. 166-7, 176-8. Ibid.3pp. 310,266-7.

66 68

Ibid.3pp. 134-5. Ibid.3pp. 160-1.

The nineteenth-century background

51

2s Od and food), among better class artisans'; and in Hartlepool old women did 'a little sewing or knitting'. Likewise, in Bellingham many shepherds were able to work until old age, 'sometimes helped by aged wife or younger members of family . . . Aged women sometimes go out charring and nursing (Is Od to Is 6d a day and food). Others live with married children, who look after them kindly in return for help.' In Gloucester, women 'until extreme old age' performed charring and laundry work, 'seldom working more than one day a week, or getting more than Is Od a day'.69 In the rural labour market, both men and women continued working for as long as they were physically able. When retirement came, it was 'infirmity' retirement. (As has already been noted, this fact alone makes it misleading to draw parallels between Poor Law dependency by the aged in pre-industrial society and retirement today.) The return from Ely was illustrative of this: 'Average labourer works till he can work no longer, i.e. to 70 or 75. Some few take light work, or do odd jobs, earning small pittance. If quite broken down or worn out they go to the workhouse.'70 These placid, rural communities provided a model of what social relations and Poor Law relief practices had been before industrialisation. At the other extreme, the information collected from urban areas revealed the world as it would become in the future. In such areas the introduction of new technology was displacing older workers; there was constant competition from the young; and where work was unskilled it was often physically arduous, rendering a worker 'worn-out' a good ten years earlier than in rural areas. In towns and cities, Booth concluded, men 'not only break down at an earlier age, but are accounted "incapable" sooner still . . . In one way or another effective working life is ten years longer in the country than in the town, or, speaking generally, is as seventy to sixty.'71 As has been noted a few pages earlier, this kind of comment, increasingly made by many social observers from the late nineteenth century onwards, was more a reflection of the lack of jobs for older workers than any actual decline in their health status. The midland areas contained many centres of manufacturing; the replies from these showed that men had great difficulty obtaining work after the age of 50 if they had been dismissed. Thus in Derby there was 'little employment for the aged, who are crowded out by the number of young people out of work, ready to undertake anything that crops up'. 72 Likewise, in the northern districts there was far less work for older men in urban as compared with rural areas. 'Where all employments are 69 71

Ibid.,pp. 110-11, 114-15, 108-9,206-7. 72 Ibid., p. 321. Ibid., pp. 218, 188-9.

70

Ibid.,pp. 150-1.

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The campaign for old age pensions

highly skilled or laborious, age specially disqualifies', noted Booth. 73 In York, 'masters grow less willing to employ any but young men'. In Sheffield, 'Old men past work are few, killed off by heavy character of iron and steel works, grinders' disease, lead colic, phthisis, and intemperance.' In any case, work for older men was practically non-existent. Similarly, in Stockton, 'A few old women get washing, rough sewing and mending; younger women compete for this, and the supply is limited. For men there is almost nothing, except street sweeping.' Competition with the young men in an over-stocked urban labour market was also a feature in Hartlepool: there aged men had much greater difficulty in obtaining employment than formerly 'as, owing to increased population, young people are numerous and preferred'; there was thus very little employment - 'old men may act as caretakers or watchmen'. 74 Broadly speaking, these examples typified the developing sectors of the urban labour market, which was increasingly marginalising older workers. In Southwell (Nottingham) there was 'Much less work for the aged than formerly; in villages the only employment open to men is agricultural work; in towns, gardening and odd jobs in addition; earnings Is 6d to 2s 6d a day'. Likewise in Walsall there was 'no special employments for aged. Difficulty of old men in finding work increases; so many young available; absorption of private firms by Joint Stock Companies has destroyed old friendly relations between individual masters and old servants.' Often, a specific development in production techniques could be identified: for example, in Mansfield the introduction of new machinery in the hosiery trade was reported to have caused 'much distress' among older workers.75 However, where there were long-standing industries with 'traditional', paternalistic employer-employee relations, the older workers would be looked after if they had given the firm long service. This was particularly true of the mining industry (made up of many small coal companies). Thus in Morpeth 'aged miners, having worked long in one pit, are kept on at pit's mouth to 70 or 80, doing easy jobs at lower wages'. In Stockton 'old men work in mines, go round calling people in early morning. Owners are very good in providing the old with light work', and in Bootle the local mining company was 'very good to the old, giving many light work'.76 Textile mills also provided lighter work for their aged employees, 'suited to their failing powers'. Railway companies operated similar support schemes. In Gateshead, the North Eastern Railway was the largest employer: it tended to pension off its 'old servants' or employed them 'as messengers, watchmen, etc. (10s Od to 73 75

74 Ibid., p. 142. Ibid.,pp. 118-19, 120-1, 110-11, 114-15. 76 Ibid.,pp. 202-3, 196-7,230. Ibid.,pp. 108-9,110-11,130-1.

The nineteenth-century background

53

20s Od a week)'. 77 It was clear to Booth that a transition was taking place, and he described the problem thus (in a passage he cited frequently as a concise summary of the situation): Everywhere a good deal is done for old servants. Their case is a recognised charge on all industrial undertakings of character and long standing, and is usually met by the provision of suitable light work at ages based rather upon the needs of the recipient than on the value of the services rendered . . . These factors are found less, and increasingly less, in urban than in rural communities, and the effect on the condition of the old is very serious.78 These new developments in urban industry were specifically examined in a second publication of Booth's - the 'Industry Series' of Life and Labour.19 Coming from a business background (his own shipping firm), Booth viewed social conditions with the sharp eye of the perceptive capitalist. He was convinced that a new kind of industrial system was emerging in the 1880s and 1890s - he called it 'the modern system' marked by large joint-stock companies (replacing small family firms), technology-intensive production methods, scientific management of the workforce, a more impersonal capitalist/employee relationship, new and more specialised divisions of labour - and the gradual displacement of older workers. 'The recognised characteristics of modern industry are an extreme division of labour, a continuously extending use of machinery, and a general complexity of organisation', he observed. He was not pessimistic about these changes; small firms would always exist: There is consequently a continuous flux in the development of industry, and it would be as reasonable to suppose that the day of small businesses is over as to look for an end of gnats, because of the strong flight or open beak of the swallow, or of smallfishesbecause of the whale's great mouth. Booth argued that the new large firms need not automatically lead to more impersonal and alienating relationships between capitalist and worker. 80 However, he was clearly concerned that new social and political problems could be thrown up by this modernisation process: if, for example, it worsened rates of poverty, then there could be problems of social disorder and political unrest. There was no reason, thought Booth, why the new industrial system should produce greater poverty for the majority of workers. But he clearly believed that it was worsening the condition of the old by displacing them from jobs, and gave evidence to that effect to the 1893-5 Royal Commission on the Aged Poor. 77 79

80

78 Ibid., pp. 136-7, 114-15. Ibid.,pp. 3 2 1 - 2 . Charles Booth, Life and Labour of the People in London: Second Series: Industry (1903 edn). Volumes V - I X form Volumes I - V of the 'Industry Series 5. In the following footnotes, the volume numbers refer to the latter. Ibid., vol. V, pp. 6 9 - 7 1 .

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The campaign for old age pensions

As an employer, Booth was fascinated by the effect that these structural economic changes were having on the lives of ordinary people who sold their labour in a labour market that was complex to the point of anarchy. How did workers - especially the unskilled - survive the Darwinian struggle in 'the seething mass of industrial life',81 particularly when demand was affected by a complex set of variables (the trade cycle, the seasons, the weather and so on) and there was often an overabundance of labour supply? How did they negotiate the fluctuations of income that would accompany the life course - in particular, the fact that unskilled males tended to experience a peak of earning power when aged in their twenties (in contrast to the middle-class professions, where the peak was in middle age)? The answer was, of course, that there were extraordinarily complex age stratifications in the London labour market that intersected divisions of skill, class and gender. Except for a small minority of exceptionally stable skilled trades, a worker's progression through the life course was marked by frequent changes of job (or downward occupational mobility caused by 'life-cycle deskilling', as Ransome and Sutch have described it). 82 These changes were dictated by physical ability, and hence by age. Often, the series of occupations would be logically connected. To give but one example: sailors and seamen found it impossible to continue at sea after about the age of 50, when the required strength, dexterity and general physical endurance declined. They would then obtain work in the docks, ports or other ship-related businesses on dry land, where their knowledge and experience would be needed. Some became house painters: the latter was ca trade to which men often turn late in life. Every sailor is a painter'. 83 Likewise, publicans had a high age-profile because theirs was an occupation filled by men who had retired from other more physically demanding jobs (whereas barmen tended to be young).84 Recognising that an analysis according to age was thus enormously important, Booth was determined to investigate 'the manner in which opportunities of employment necessarily shift from trade to trade as the workers pass from boyhood to old age'. But he recognised that these age stratifications made the analytical process very problematic: 81 82

83 84

Ibid., p. 4 7 . Roger L. Ransome and Richard Sutch, 'The Impact of Ageing o n the Employment of M e n in American Working-Class Communities at the E n d of the Nineteenth Century', in David Kertzer and Peter Laslett (eds.), Ageing in the Past: Demography, Society, and Old Age ( 1 9 9 5 ) , pp. 3 0 3 - 2 7 . Booth, Life and Labour. Industry, vol. I l l , p. 3 6 3 and vol. I, p. 7 8 . Ibid., vol. I l l , p. 2 3 0 .

The nineteenth-century background

55

Many who are messengers up to twenty may appear later, for instance, under railway service; a surplus of young domestic servants may pass into the category of extra (i.e. outside) domestic service, or be found as coffee or lodging-house keepers or publicans, or become cabmen, busmen or stablemen, or join the police; lads described as 'factory labourers, undefined', or engaged in sundry manufactures - soap, candles, chemicals, etc. - may, perhaps, afterwards feed the ranks of dock labour, or become in their years of greatest strength gasworkers or coal-porters.85

There might be other complicating factors, such as the seasons. For example, men who worked as gasworkers in the winter (when demand was high, and jobs were relatively plentiful) often worked as building workers in the summer.86 Nevertheless, despite this complexity some general patterns could clearly be discerned. Booth provides us with a remarkable analysis of the age profiles of key industries in the London labour market, correlating these age profiles with the stage of development of that industry, i.e. whether it was new and expanding, or old and declining. His analysis is mainly confined to male workers because of the fact that marriage introduced a complicating factor into female labour force participation. Industries which were 'youthful' (containing a high proportion of young workers) tended to be one of three types: (a) large firms, in areas of recent economic development, with new technology-intensive production methods; (b) service industries, involving one-to-one contact with members of the public who expected those serving them to be young; and (c) occupations where dexterity, strength and vigour were required, or where the health hazards were so extreme that the effective working life was short. A good example of (a) was surgical, scientific and electrical instrument-making. 'The age distribution is characteristic of a new trade', noted Booth.87 Industry (b) was typified by the drapery trade, containing high proportions of both young men (49 per cent of its total male workforce aged under 25) and young women (65 per cent of its total female workforce aged under 25). The extended hours worked by drapers, combined with long periods standing up, had a detrimental effect on their health (for example, Booth noted that they often had to bolt down their meals in very brief absences from the serving counter). Most of the customers were young women, and they liked to be served by young men. Hence, unless they could start up an independent business most young drapers had to seek other employment as they grew older.88 Four apposite examples of industry type (c) were plumbing, fur85 87

Ibid., vol. V, pp. 43, 47. Ibid., vol. II, p. 35.

88

86 Ibid., vol. V, p. 261. Ibid., vol. Ill, pp. 66-80.

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The campaign for old age pensions

making, printing and pottery work. Plumbing, requiring strength, suppleness and manual dexterity, had a youthful age profile, with lots of boys as mates. Fur-skin dressers and furriers tended to inhale fur into their lungs and were 'generally past work at fifty'. Likewise, printers suffered pulmonary complaints because of the atmosphere at work: if a compositor could avoid this, he could work to over 60; however, machine work, which was harder, had few men aged over 55. Pottery and earthenware work was strenuous, hot and dusty. Booth observed: The irregularity of hours, the periods of idleness, and the stress and character of the work, as well as the high level of pay, are enough to account for the bad reputation these men have for intemperance. They cannot continue at it later than up to forty-five, or in rare cases,fiftyyears of age, and are apt to fall into the ranks of the very irregularly employed casual labourers and loafers.89 On the other hand, the industrial features that correlated with an 'old' age profile were: smaller firms, long-established types of industry, more labour-intensive production methods, lighter work, and the industry undergoing a decline. 'An excess of elderly men . . . is a sure sign of a declining industry', noted Booth: 'The most striking instances of excessive proportion of the old are the decaying or decayed trades coopers, shipwrights, silk-weavers, rope-makers, and watch-makers.'90 The construction of clocks and watches by hand was being replaced by mechanisation, and was an example of light work in a declining trade. Another was wooden boat-building - experiencing slow decay because of the appearance of iron and steel ships - where the trade union placed limits on the entry of young workers so that the shrinking number of jobs could be shared out by existing older workers: because wooden boat-building was light work, there were 'plenty of good workmen past sixty years of age'. 91 The last resort of older workers would be casual work, or precarious self-employed activity: as David Caradog Jones was to observe in Liverpool in the 1930s, Booth noted that 'the old and broken down of other trades sometimes take to street selling as a last resource'.92 What seemed to be happening was that the speed of transition to new industrial methods, and a younger workforce, was taking place at a rate that could not be accommodated by the existing age structure of London labour, and the low-grade jobs that had previously offered some sustenance to the 'worn-out' worker were simply disappearing. Continued in-migration of youth from the surrounding rural areas maintained a constant labour supply. Hence older workers were experiencing increasing difficulty in finding the kind of 89 90 92

Ibid., vol. I, p. 8 0 ; vol. II, pp. 138, 2 1 0 , 9 0 - 1 . 91 Ibid., vol. I, p. 2 5 1 and vol. V, p. 4 9 . Ibid., vol. I, pp. 2 6 9 - 7 5 . Ibid., vol. I l l , p. 2 5 9 .

The nineteenth-century background

57

light or casual jobs that their fathers would have occupied when in their sixties and seventies. Essentially, there was developing a 'crisis of work' for the older male worker. Booth was interested in ascertaining the point at which 'loss of capacity' arrived, and the worker was incapable of working any more. Clearly, the answer was different for every trade, depending on the complex interaction of the factors summarised above. But given the hours of work, and conditions, it is not surprising that many workers were cworn-out' at 60 or 65. The best conditions were in healthy and light trades: cabinet-makers, for instance, commenced work at 8 or 9 a.m., had ten minutes off at 10.30 for lunch, one hour for dinner, half an hour for tea, and ceased work at 7 or 8 p.m., working to 1 p.m. on Saturdays. Others were not so lucky. Glass-bevellers experienced ioss or diminution of wage-earning capacity' around 55 (silverers, cutters and fitters) or earlier (bevellers) 'because the cold, wet process, interconnected with drinking habits, induces rheumatism'. Older woodcarvers had to 'confine themselves to coarse work, at low pay, as eye and hand fail early'. Long hours alone could render the working life short: for example, baking required 'physical strength and a power of sustained effort under exceptionally exhausting conditions . . . and where long hours prevail few men can stand the strain for more than twenty years'. The older bakers developed phthisis, bronchitis and pneumonia, because of the flour in their lungs. Thus bakers appeared to 'lack energy. The masters complain of stupidity and lack of interest in their work; and say that the men have "no ambition" '. Likewise, blacksmiths experienced arduous work in hot, noisy and dusty surroundings: hence 'men are worn out at the comparatively early age of fifty, and after forty-five it is not easy to obtain a fresh job'. 93 However, in some trades older workers could remain in employment: if there was a high level of skill involved, if the work was light in nature and healthy in environment, and if the trade was stable because of steady consumer demand. Thus jewellers and piano-makers could work to old age. 94 Cabinet-making was undertaken in small, old-style firms with close relations between masters and men: hence older workers were kept on for as long as possible.95 This was also true for tailors, but for a different reason: most were self-employed, and could work to old age (as long as they were able to obtain orders) since there was no employer to dismiss them. 96 In the most highly organised of these trades, there was virtually a job 93 94 96

Ibid., vol. I, pp. 1 8 9 - 9 0 ; vol. Ill, pp. 1 5 6 - 7 and vol. I, p. 3 3 0 . 95 Ibid., vol. II, pp. 10, 6 0 . Ibid., vol. I, pp. 1 7 8 - 8 1 . Ibid., vol. Ill, p. 9.

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for life. 'The boy who starts work in any of these trades may fairly hope to live his life and end his days in it', noted Booth, citing cabinetmaking, engineering, iron and steel work, leather-dressing, bookselling and milling as examples.97 Clerks and bank officials also stayed for life: it was very difficult for a middle-aged bank clerk to regain employment in the same occupation, if dismissed. In such long-service employment, loyalty bonuses were used as inducements 'to encourage those who have once entered to remain as long as they are fit for work'; when retirement was absolutely necessary, a pension would be forthcoming. Again, typefounding was 'a trade in which men may live and die in one situation, and is characterised by strong family ties . . . Men are very rarely discharged on account of old age, their experience sometimes making old men more valuable than the younger ones'. 98 Clearly, these kinds of enterprises were the pointers to the future, in that they were developing their own pension schemes as a way of removing older workers deemed inefficient, and in them it was very difficult for the middle-aged to find new work: in engineering (which was experiencing the introduction of electrical power and automation) men could stay in a job until aged 70 or later; but it was 'universally admitted to be a most difficult thing for a stranger to obtain employment if he is, or looks to be, fifty years of age'. 99 Booth viewed the old mid-Victorian fluidity of labour as having a value that was functional to economic enterprise: the alternative would be 'to sink to a system of caste, with all its fatal stagnation'.100 But he was not unduly perturbed by the obvious transition to modern industrial organisation, with its new concentrations of capital. Much could be gained by it: for example, economies of scale, scientific management and precise job-grading could greatly improve efficiency. Booth wrote: There is nothing that is necessarily hostile to the welfare of the worker in the specialisation of labour, or in the use of machinery, or in good book-keeping, or in the substitution of science for rule of thumb . . . Although something is lost in the character of the relations between employer and employed under the large system of industry, something also is gained.101 As his biographers have observed, Booth was broadly optimistic that, with some judicious measure of state intervention (by 'limited socialism'), capitalism could flourish and simultaneously eliminate poverty - providing that workers took on an 'individualist' mentality and adapted their skills to new demands. 102 The one group that was clearly losing out, however, was the older workers. They were increasingly at an 97 99 102

98 Ibid., vol. V, p. 44. Ibid., vol. Ill, pp. 276-7 and vol. I, pp. 348-51. 10 101 Ibid., vol. I, p. 303. ° Ibid., vol. V, p. 50. Ibid., pp. 70-1. T. S. and M. B. Simey, Charles Booth, Social Scientist (I960), pp. 132-3.

The nineteenth-century background

59

industrial disadvantage, 'so that they do not, except indirectly, share in the general prosperity'.103 Some system of income support would be needed for them, if industry was to be further streamlined and if the Poor Law was to be tightened up. This, then, was the background to the late nineteenth-century campaign for old age pensions. It was built upon a dual imperative: the need to improve industrial productivity by disciplining the young, able-bodied male worker (via a stricter Poor Law); and the need to hasten the industrial exit of the older, 'worn-out5 worker who was increasingly surplus to the requirements of modern capitalism. At its outset, therefore, the pensions campaign was highly conservative. As Helen Bosanquet perceptively observed, 'it is an entirely middle-class movement in its origin, and in no sense emanates from the working classes themselves'.104 But by the late 1890s these essentially conservative motives were being turned round as socialists began to see old age pensions as something very different: they would recognise the citizenship worth of old people, providing them with a guaranteed income; they would 'tighten up' the labour market by removing the competition of older workers; and they would re-channel wealth to the working class by confiscatory levels of taxation levied upon the capitalist class. As Will Crooks put it, old age pensions would benefit 'the veterans of industry, people of almost endless toil, who have fought for and won the industrial and commercial supremacy of Great Britain . . . We claim these pensions as a right.'105 By the late 1890s, a lively and often acrimonious debate had emerged, based upon contested meanings of concepts like 'pauperisation' or the 'worn-out worker', and symbolising a wider conflict between capital and labour. It was from these intriguingly paradoxical origins that a 'politics of retirement' was to develop. 103

104

105

Speech by Booth, Old Age Pensions. Verbatim Report of the Proceedings at a Conference, 1899 (1899), p . 4. Helen Bosanquet, The Strength of the People. A Study in Social Economics (1902), p. 2 4 7 . House of Commons Debates [henceforth H of C Deb.], 4s, vol. C X C I I , 9 July 1908, col. 197.

Blackley, Chamberlain and Booth

Canon Blackley In the November 1878 issue of the journal the Nineteenth Century there was published an article on 'National Insurance' by a somewhat obscure rural vicar, Canon William Blackley. Blackley's scheme has passed into history more for its timing than for its originality: it appeared just before that great decade of social discussion and structural economic change, the 1880s, and thus engendered public controversy. It is one of the paradoxes of British social policy history that a plan for state-funded old age pensions, seen by many in the early twentieth century as a piece of radical socialist welfare policy, should have originated in one of such conservative views. William Lewery Blackley was born in Dundalk, Ireland, on 30 December 1830. He came from a prosperous landowning family, wealthy enough to send him to school in Brussels, and thereafter he attended Trinity College, Dublin. Ordained in 1854, he became a curate of the parish of St Peter's in Southwark - a very poor part of London, subject to all the problems of Victorian inner-city working-class life. One of these caught up with Blackley very soon after his arrival: he contracted cholera and nearly died. It was largely for the sake of his health, therefore, that in 1855 he was transferred to Frensham, in Surrey, to be vicar. He thus spent most of his working life in the relative tranquillity of rural parishes: first, Frensham until 1867; then North Waltham, in Hampshire, until 1883; then King's Somborne, also in Hampshire, until 1889. Finally, in 1889 Blackley moved to St James the Less, Westminster, and remained there until his death in 1902. This move to London was occasioned not by religious impulses, but because of his involvement in various campaigns and public activities (particularly old age pensions for the clergy): he moved there 'so as to be able more easily and at less loss of time to attend the necessary meetings'.l 1

M. J. J. Blackley, Thrift and National Insurance as a Security Against Pauperism, with a Memoir of the Late Rev. Canon Blackley and Reprint of His Essays (1906), pp. 1—23.

60

Blackley, Chamberlain and Booth

61

The early advocate of old age pensions was thus a conservative vicar deeply embedded in rural society and with the cast of mind of the rentier class - a fact that should be borne in mind when considering his views on the causes of working class poverty. Two inter-related strands of thought in particular ran through his analysis of social problems. The first was an unbending commitment to the temperance movement. Blackley and his family were total abstainers, and he held strong views on the evils of drink among the working classes; whenever he moved to a new parish, he immediately began a temperance campaign in it. The second was the conviction that most social evils stemmed from what he called 'national improvidence'. This idea was to be repeatedly stressed in his addresses and writings, and its moral and political implications were cogently outlined in a sermon preached at Westminster Abbey on 28 September 1879. Blackley insisted that many questions of social politics - 'secular education, improved sanitation, purity of election, and so forth' - were not suitable matters for discussion from the pulpit. National improvidence was, however. It lay at the root of idleness, self-indulgence, drunkenness and poverty: it was ca national sin', stemming from 'want of Christian self-denial'. Symptomatic of this was the reliance by some 700,000 citizens on the Poor Law, which had to be paid for by 'the forced taxation of the provident of all classes, high and low alike'. 'This inoculation of pauperism' had 'infected the whole spirit of the nation', and was leading to political discontent, since the independent working man was increasingly encouraged to feel unity with the 'new class' of paupers. Throughout Blackley's writing there ran an obsessive fear of pauperism (manifested in spine-chilling warnings), the growth of which might destabilise existing class relations. Pauperism, he wrote, 'creates a new class in our state which confuses our whole social order, and does the work of Satan in awaking and fostering immeasurable social discords.'2 In common with such apocalyptic social writing, there was an interesting generational distancing on Blackley's part, manifested in a strong hostility towards the potent masculinity of the young male: he frequently referred to 'the really ignorant, sensual, unenlightened boys of our nation', with 'their waste, their sensuality, their ignorance and their selfishness'.3 The solution was to infuse the independent working man with a sense 2

3

W. L. Blackley, 'National Improvidence - a Sermon Preached at Westminster Abbey on Sunday September 28 1879', in Blackley, Thrift, pp. 128-39. This volume contains several of Blackley's writings. See also, W. L. Blackley, Collected Essays on the Prevention of Pauperism (1880). W. L. Blackley, 'National Insurance: a Cheap, Practical, and Popular Means of Abolishing Poor Rates', Nineteenth Century, 4, Nov. 1878, pp. 854, 838.

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of financial security by a scheme of national provident insurance. This would wean him away from the dangerous and false political alliance with the 'new' pauper class, and show to him that he was really 'a rich man and a capitalist compared to the pauper'. 4 Hence Blackley's celebrated November 1878 article in the Nineteenth Century was entitled 'National Insurance: a Cheap, Practical, and Popular Means of Abolishing Poor Rates'. Written in the typically rambling and hyperbolic style of the nineteenth century social tract, Blackley's article proposed a strategy of individual capital accumulation: each wage earner should pay a lump sum of money into a 'national club' (in effect, a state-run friendly society) when he or she was aged between 17 and 20. The amount could vary depending on when it was paid: he initially suggested £15 if paid at the age of 20, or £14 at I8V2; in time, as the scheme prospered, this could probably be reduced to £10 'or even much less'. With accumulated interest, it could fund a sickness benefit scheme paying 8s Od per week until the age of 70, and then a pension of 4s Od per week thereafter. The advantage of paying in the lump sum early in life was that it would then accumulate the highest interest: £15 invested at the age of twenty was the equivalent of £24 invested at the age of thirty-five. Benefits would be paid through the Post Office, and everyone would be compelled to join the scheme. Blackley's obsession was with the 'enormous class' of improvident people that he believed to exist - 'young labourers by the dozen without a change of decent clothes, continually and brutally drinking, and living almost like savages, while earning fully a pound a week'. If his scheme were implemented, many beneficial results would follow, he believed: providence, thrift and independence would spread throughout the working class; Poor Law expenditure would fall - initially by half, and then perhaps to such an extent that the Poor Law could be wound up pauperism would disappear and wages would rise; and 'every male Englishman' would be given 'a direct money interest in the stability of our institutions'.5 In essence the scheme contained those two classic recipes for social betterment endlessly proposed by the propertied classes: a remoralisation of the working class; and the enforced redistribution of the individual's own lifetime earnings towards economically vulnerable points in the life-cycle. Blackley's scheme had a large number of serious drawbacks that painfully revealed its author's distance from late nineteenth-century working-class life. Despite his optimistic assertion that the only objec4 5

Blackley, 'National Improvidence', p. 136. 'National Insurance', pp. 838, 841, 855-6.

Blackley, Chamberlain and Booth

63

tions would be 'matters not of principle, but of detail', there were several fundamental flaws to his pension plan. In the first place, it was utterly unrealistic to expect that young men could save such a large lump sum so quickly. Blackley was briskly dismissive of this problem, arguing that it would be no hardship for a young bachelor to 'live well' on 9s Od a week and put the rest of his income towards saving £15 by the age of 20 to fund the scheme.6 However, to argue this was to ignore the classic problem in all contributory old age pension schemes: those who needed a pension most in old age were precisely those who were least able to save during their working lives - the low paid, the irregularly employed and women. For them, saving would have been difficult in the extreme - unless accompanied by levels of compulsion that would have had to be positively draconian. (Blackley's enemies took a delight in pointing out just how much compulsion there would have to be.) 7 And many wages were below this amount: for example, in 1872 agricultural wages in the depressed southern counties averaged around 13s Od to 14s Od per week, with wages in Dorset as low as 10s 4d. As Blackley wrote those very words at his vicarage in Hampshire, agricultural labourers in the fields around him were earning an average of 13s 8d per week, which had fallen to 12s Od per week by 1898.8 It is instructive to note that, by contrast, the income from Blackley's living in King's Somborne was said to be £700 per annum, or nearly £14 a week.9 Apart from its inherent impracticalities, a major drawback of the scheme was the opposition of the friendly societies. The backbone of the societies' operation was their sickness benefit provision, and they were naturally suspicious of any proposed schemes of state-sponsored welfare that threatened their power and income. In a sense, Blackley dug his own grave where the friendly societies were concerned. First, he refused to separate out his twin proposal for sickness benefit and old age pensions: the societies might have accepted the latter without the former.10 Second, he made some rash and intemperate attacks upon them. Absurdly, he claimed that the ratio of improvident to provident in the working class was three to one. Even when provident working men joined a friendly society, he declared: 'these self-denying efforts only too 6 7

8

9 10

Ibid., pp. 843, 840. J. Frome Wilkinson, The Blackley National Provident Insurance Scheme. A Protest and an Appeal (1887), pp. 5-7. Wage rates from appendix to R. E. Prothero, English Farming Past and Present (1961 edn). Frome Wilkinson, Blackley National, p. 25. E. P. Hennock, British Social Reform and German Precedents. The Case of Social Insurance,

1880-1914 (1987), p. 117.

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The campaign for old age pensions

often bring them, in the end, to no better condition than that of the improvident pauper'. The reason, claimed Blackley (citing some rather dubious evidence from Hampshire), was that half of all friendly society policies lapsed, and that nine out of ten of them were insolvent.11 Another sweeping claim by Blackley was that the British working man was less 'provident' than his continental counterparts.12 The extent of friendly society ire can be seen in the Rev. J. Frome Wilkinson's attack on Blackley, The Blackley National Provident Insurance Scheme. A Protest and an Appeal (1887). Wilkinson showed that friendly society membership was much higher in Britain than on the continent, and strongly disputed Blackley's criticism of friendly society finances. Much more attuned to the realities of working-class life, Wilkinson argued that it was inconceivable that workers could save the amount of Blackley's deposit: wages were simply too low, or earnings might peak later in life, or (especially in rural areas) employers might victimise those who were known to be saving for the future. Wilkinson's book also contained some amusingly scurrilous comments on Blackley's pastoral competence (from local residents in King's Somborne), alleging that he was too often absent in London pursuing his political career to look after his parish properly. It is clear that Wilkinson's attack was symbolic of labour aristocrat resentment that a wealthy, sedentary, middle-class vicar could tar the entire working class with the same brush of contempt. Blackley's proposal aroused considerable discussion. He founded the National Providence League in 1880 (with John Lloyd as secretary, and a galaxy of establishment and religious figures - including the Earl of Shaftesbury - as members). In 1885, a House of Commons Select Committee on National Provident Insurance was appointed to investigate the scheme: it considered the matter for two years and then rejected it, because of the degree of compulsion that would have had to be involved, and because of its redistributive effect.13 The League gave assistance to Joseph Chamberlain in 1891 when he formed a committee of one hundred MPs sympathetic to the cause of pensions. But the inherent limitations of Blackley's scheme, plus the opposition of the friendly societies, made for little progress. By the 1880s, therefore, the idea of state old age pensions had hesitantly entered the arena of public debate. Three factors were there11

12 13

Blackley, 'National Insurance', pp. 835-7. This was a common accusation against the friendly societies but, as will be shown in a subsequent chapter, it was based upon an over-pessimistic definition of'insolvency'. W. L. Blackley, Thrift and Improvidence: a Wordfor Working Men (1884), p. 4. Report from the Select Committee on National Provident Insurance (1887).

Blackley, Chamberlain and Booth

65

after to push it further into the realm of practical politics, against a background of worsening industrial prospects for the older worker: first, the interest and patronage of a leading politician; second, rigorous empirical evidence of the extent of poverty and destitution in old age; third, the backing of the newly emerging labour movement which, with its roots in the trade unions and other working-class organisations, was able to make the old age pensions agitation a mass movement. Joseph Chamberlain The first of these factors appeared in the person of Joseph Chamberlain, who - for all his ideological ambivalence, political trimming and occasional evasiveness - emerged as the Westminster politician who did most to keep the question alive in the 1890s. This was certainly the verdict of many contemporaries: for example, during the passage of the 1908 Bill, Lloyd George was gracious enough to call Chamberlain 'the statesman who, on the whole, has done more to popularise the question of old age pensions in this country than anyone else',14 and similar tributes poured forth from the press. In tracing the evolution of Joseph Chamberlain's interest in old age pensions, we must first take note of his background, for in many ways his own life mirrored the evolution of nineteenth century capitalism. Born on 8 July 1836, his father owned a boot and shoe business in Camberwell, South London, into which the young Joseph entered after attending University College School. A turning point in his life occurred in 1854, when Chamberlain's uncle, John Nettlefold, bought the UK rights to the manufacture of a newly invented tapered iron wood-screw. The 18-year-old Joseph went to work in this Birmingham-based family business, and suddenly found himself immersed in a very different and challenging commercial environment - one which epitomised the aggressive expansionism of the successful mid-nineteenth-century family firm. In order to survive, consolidate and expand, Nettlefolds had to out-perform its Birmingham rivals and break into highly competitive foreign markets. Possessed of considerable business acumen, the young Joseph Chamberlain proved to be a key factor in the firm's rapid expansion, and Nettlefolds inexorably swallowed up its less efficient local rivals - to the accompaniment of allegations about its ruthless business practices.15 The economic base of mid-nineteenth-century Birmingham consisted 14 15

HofCDeb., 4s, vol. CXC, 15 June 1908, col. 566. Peter T. Marsh, Joseph Chamberlain. Entrepreneur in Politics (1994), chs. 1 and 2; Dennis Judd, Radical Joe: A Life ofJoseph Chamberlain (1977), pp. 1-20.

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of numerous small manufacturing workshops, resulting in a strong tradition of craft unionism, a relatively prosperous labour aristocracy and considerable upward social mobility. As a result, a 'radical tradition' was strongly in evidence, with the Liberal Party dominating local politics. Joseph Chamberlain eagerly threw himself into this political cauldron, helping to found the National Education League in 1869 and becoming Mayor of Birmingham in 1873. For Chamberlain, therefore, the application of capitalist principles to local government became a blueprint for a national political strategy. By the time of his entry into parliament in 1876 as a Liberal (having largely sold out his business interests) his political philosophy consisted of three elements. The first was the urgent need to respond to the 'legitimate' political claims of the working man, partly because Chamberlain believed these to have an inherent social justice, but partly also because he presciently observed that the 1867 Reform Act had created a sea-change in the political culture. The threat of working-class political power was only weak and implicit in the 1870s, but by the following decade (especially after the 1884 Reform Act) it had become very real indeed with the advance of socialism. Chamberlain was convinced that the 'one nation' commonality of interests that flourished in the small workshops of Birmingham could be replicated on a national scale, by judicious reforms. Socialism could not be defeated by defensive posturing, or Gladstonian complacency: it had to be met with a new kind of populist radicalism. Personally, Chamberlain found himself out of sympathy with many of the new socialist leaders of the 1880s, and he could never shake off the conviction that socialism was a kind of political aberration that was fundamentally alien to the temperament and true interests of the British worker. A radical programme not at odds with the basic tenets of capitalism would thus easily pre-empt the socialist threat and meet the 'legitimate' political claims of the working man. Second, this wooing of the newly enfranchised working man was to be achieved by greater state intervention, very selectively applied, to alleviate the grosser inequalities of rampant free market capitalism and simultaneously improve the health and productivity of the workforce. An early favourite cause of Chamberlain's - as with other radical Liberals - was free, unsectarian state elementary education financed wholly out of the rates, and he was bitterly disappointed at the inadequacy of the 1870 Education Act. Finally, Chamberlain's conception of social reform was individualist, aiming to achieve the moral uplift of the working class into a petty capitalist mentality. Social reform could only be contemplated if it promised to inculcate thrift and self-reliance. As will be shown, this

Blackley, Chamberlain and Booth

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obsession with labour aristocrat values instantly rendered Chamberlain's reformist prescriptions largely irrelevant to the real poverty problem in late Victorian Britain. All in all, these three underpinnings made Chamberlain's radicalism limited, cautious and very soon outdated. As Peter Fraser observes, far from being a fundamental challenge to the laissez-faire system, Chamberlain's programme in fact represented the death throes of the old nineteenth-century politics.16 But for a time, in the political atmosphere of the 1870s and 1880s, Joseph Chamberlain appeared to be a man with ideas that were dangerously advanced. As several historians have observed, it is difficult from today's perspective to appreciate the nuanced complexities of late Victorian politics, and to understand the symbolism of, and the precise linkages between, issues like Church disestablishment, land reform, temperance, imperialism, parliamentary reform and education. In addition, historians have shared Beatrice Webb's frustration at trying to understand 'the mixed motive and the difficulties of a nature in which genuine enthusiasm and personal ambition are so curiously interwoven'.17 Even his most sympathetic (and most recent) biographer expresses some uncertainty over whether Chamberlain's espousal of old age pensions was genuine, or whether it was merely ca self-serving gesture'.18 It is only necessary to note that the Liberal Party at this time represented an ideological 'house of many mansions', a loose coalition of diverse interests united by loyalty to Gladstone's leadership. Until the end of the 1880s, the left wing of the Liberal Party offered a natural home for radicals and even a handful of working-class MPs (providing they did not ask too many questions about awkward issues such as the eight-hour day); to such radicals, as to the 'new Liberals' of a generation later, it seemed tantalisingly possible that the party could be transformed and modernised, and the power of the patrician Whigs broken. It was in this context that Chamberlain was urgently pressing his claims to be the natural leader of the radicals; and, having achieved ministerial status in 1880 as President of the Board of Trade, he evolved his 'radical programme' and presented it to the public in a series of speeches in 1885. For the 1885 general election campaign, the package was re-titled the 'unauthorised programme', and it swept Chamberlain and his fellow Liberals into power in all seven Birmingham seats. Essentially, the programme comprised the bolder Liberal nostrums of the 1880s - free elementary education, land reform, fiscal reform (involving a shift from indirect to direct taxation and a graduated 16

17

Peter Fraser, Joseph Chamberlain: Radicalism and Empire, 1868-1914 (1966), pp. xiv, 46. 18 Quoted in ibid., p. 120. Marsh, Chamberlain, p. 350.

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income tax), overhaul and strengthening of local government, further parliamentary reform and so on. 19 The first and most notorious expression of the 'radical programme' was the 'Doctrine of Ransom' speech, delivered to a working men's demonstration at Birmingham Town Hall on 5 January 1885. Chamberlain began by pointing out that massive changes had been ushered in by the 1884 Reform Act: three-fifths of the electorate were now working men, and the existing political parties would have to adjust to the fact that 'the centre of power has been shifted, and the old order is giving place to the new'. The urgent need for social reforms was placed in the context of one of the most controversial passages of nineteenth-century political rhetoric: But then I ask, what ransom will property pay for the security which it enjoys! What substitute will it find for the natural rights which have ceased to be recognised? Society is banded together in order to protect itself against the instincts of those of its members who would make very short work of private ownership if they were left alone.20 The furore that followed this speech paradoxically attested to the ambiguity of Chamberlain's message - an ambiguity intriguingly revealed by the use of the rhetorical exclamation mark to close the first sentence in the published collection of his speeches. (Most subsequent historians have replaced it with the incorrect and less subtle question mark.) In other words, commentators of all political complexions read into the speech whatever meaning they chose - in essence, whether Chamberlain was proposing social reform as a means of weakening the rights of private property, or as a means of ultimately strengthening them. Other 'radical programme' speeches of 1885 were built upon the four central social reforms of free education, land reform, local government reorganisation and tax reform, dressed up in rhetorical flourishes deploring the extremes of wealth and poverty. Prosperity had expanded in Britain 'in a degree and proportion for which the most sanguine of our predecessors was not in the slightest degree prepared. The accumulation of capital has been enormous'. Yet there was always a million of the population in receipt of poor relief, and another million on the verge of pauperism. However, although acknowledging the hardship of the very poorest - the urban casual poor and the agricultural labourers Chamberlain's reformist creativity could offer only moral exhortations appropriate to the labour aristocrat, and he could not bring himself to 19

20

C. H. D. Howard, 'Joseph Chamberlain and the "Unauthorised Programme"', English Historical Review, vol. 65, Oct. 1950, pp. 477, 4 8 4 - 5 . Charles W. Boyd (ed.), Mr. Chamberlain's Speeches, vol. I (1914), pp. 130-9.

Blackley, Chamberlain and Booth

69

advocate the redistribution of wealth necessary to finance effective reforms, since such 'confiscation' would 'destroy that security, and lessen that stimulus'.21 The cautiousness of Chamberlain's position thus revealed precisely those limitations on late Victorian liberalism that eventually alienated nascent socialists like Keir Hardie. The 'radical programme' speeches of the mid-1880s contained virtually no mention of poverty in old age (nor poverty among women), apart from the vague hope that 'an honest, decent and industrious man' should be able 'to lay aside something for sickness and old age'. 22 But we can see that a Blackley-type contributory pensions scheme - without the element of compulsion - would have fitted snugly into Chamberlain's reformist programme. However, such a proposal did appear several years later, after the turbulent political upheavals following the 1886 Home Rule Bill. For complex and still-debated reasons, Chamberlain led the opposition within the Liberal Party to the Bill, and subsequently split off with his supporters, attaching his loyalty to Lord Salisbury's Conservatives. In his new home, he was soon to become a restless political cuckoo. The first public advocacy of old age pensions by Joseph Chamberlain took place on 17 March 1891, when he spoke in favour of a Conservative and Unionist candidate at a by-election at Aston, following this up with several other public utterances in the same year.23 The context within which pensions were proposed was Chamberlain's 'labour programme' of 1891-2. Other elements in the programme were the extension of smallholdings, industrial accident insurance, stricter monitoring of friendly societies, reform of the Factory Acts and stronger housing legislation.24 But the centrepiece was old age pensions, and throughout 1891 and 1892, Chamberlain worked energetically to promote his new idea. (He had been impressed by the 1889 German pension scheme, though he disliked its Bismarckian compulsion.) Chamberlain studied the subject in depth, 'covering sheets and sheets of blue foolscap with notes in his minute handwriting', as his first biographer tells us; 25 he made several key speeches on the subject; he published articles (which even in cold print reveal something of the man's persuasiveness as a speaker); and, on 13 May 1891, he put together a voluntary parliamentary committee of MPs (chaired by himself) to draw up a scheme. There is no doubt 21 23

24 25

22 Ibid.,pp. 162-3, 169-70. Ibid.,p. 169. J. L. Garvin, The Life of Joseph Chamberlain (6 vols., 1933), vol. II: 1885-1895, p. 509; Joseph Chamberlain, A Political Memoir 1880-92 (1953 edn), pp. 294, 297. Garvin, Life, pp. 511 - 1 2 . Ibid., p . 513. These are to be found in the Joseph Chamberlain Papers, JC 6/3/4/7, University of Birmingham Library.

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that he more than any other politician kept the issue alive in political circles in the early 1890s. Chamberlain saw state pensions as a way of achieving a ' tight ened-up' Poor Law that would impose stricter discipline on the able-bodied male. In his abbreviated notes of evidence to the Aberdare Commission in 1893 he approved of the strict regimes of Poor Law administration, but feared that, if applied universally, 'any stereotyped system of stringency would inevitably produce a public scandal'. 'Already serious popular discontent in many districts', warned Chamberlain, continuing (with his own italics): Dangerous Parliamentary agitation, which might break down principles of the Poor Law, is certain, unless steps are taken to convince the electorate that no unnecessary harshness obtains, and that all cases of unmerited misfortune are fully and kindly considered. The popular sentiment is strongest in the case of old age pauperism, and hence any well-considered scheme of old age pensions will go far to strengthen hands of Poor Law authorities in dealing stringently with able-bodied, as well as with what may be called criminal pauperism.26

The political imperatives of the 1890s demanded a bold scheme that would outflank the new socialists. The year 1892 marked the first appearance of independent Labour MPs in the House of Commons (Keir Hardie, John Burns and Havelock Wilson); Chamberlain believed that this independent Labour representation was weak (as, indeed, it was in the 1890s), and could thus be defeated by judicious social reforms. The formation of the Independent Labour Party in 1893 caused him greater concern, however. Thus despite his contempt for most labour leaders, the progress made by socialism in the 1890s was acknowledged by Chamberlain in much more specific policy proposals alongside the lamentations about extremes of wealth and poverty. As Peter Hennock has observed, after the political turmoils of the 1886 Home Rule split, Chamberlain's need in the 1890s was to renew his contact with the working-class voter.27 Chamberlain identified four strategies that were currently being discussed. The first of these was a Bismarckian compulsory insurance scheme: this he rejected as too costly, limited to those in employment and an unwarranted infringement of personal liberty. Second, there was 'universal endowment', via tax-funded pensions as proposed by Charles Booth. Since this would cost something like £21,000,000 per annum, it was briskly dismissed by Chamberlain as 'outside the scope of practical 26

27

'Notes of Evidence by the Right H o n . J. Chamberlain, M.P.' ( 1 8 9 3 ) , Joseph Chamberlain Papers JC 6/3/4/8. Hennock, British Social Reform, p. 120.

Blackley3 Chamberlain and Booth

71

polities'. The fourth proposal - more generous out-relief to the aged was also rejected, leaving Chamberlain supporting the third option: the stimulation of voluntary thrift, in order to assist provision already being made by the prudent and self-reliant sections of the working class.28 However, for all his painstaking preparation, the logic of Chamberlain's position on pensions was built upon a set of contradictions that reflected the limitations of radical liberalism, and its ultimate class loyalties. To begin with, he convincingly argued that it was impossible for most working class individuals to save over the course of the lifecycle. Unlike in the middle classes, working-class earning power diminished as old age approached, and thus 'when old age looms close at hand, and becomes a pressing reality, he [the labourer] finds that any power of saving he may ever have had has altogether departed'. Workers in their sixties found themselves moving down the labour market into lower and lower paid jobs, until forced out by ill-health. They then eked out a precarious existence, avoiding for as long as possible any contact with a deterrent and humiliating Poor Law. Their final months or years were spent in the degrading conditions of the workhouse. On the basis of 'Ritchie's return', 401,904 out of 1,372,601 persons aged 65+ were in receipt of poor relief in the year 1891-2 - nearly 30 per cent. Among the working class, the proportion was probably 1 in 2!/2.29 Since eightninths of paupers aged 65+ had never received poor relief up to the age of 60, destitution in old age could not be said to be caused by misconduct but was due 'entirely to the incapacity consequent on advancing years'.30 Now, in the changed political world of the 1890s, Chamberlain was less willing to accept the efficacy of moral exhortations. He argued that Charity Organisation Society-type arguments about old age poverty being the result of improvidence were rendered irrelevant by the realities of urban working-class life - 'a strike, a frost, illness or accident, makes them dependent at once upon others for their subsistence' - and by the actuarial odds that were stacked against such prudence: To provide at twenty-five for an annuity of 5s a week at sixty-five would cost in the Post Office £44 16s for males and £51 18s lid for females. The annual premium payablefromtwenty-five to sixty-five for the same pension would be £1 11s lOd and £2 0s Id respectively. How can a labourer with ten shillings a week or a workman with less provide these sums? 28

29

30

Joseph Chamberlain, 'The Labour Question', Nineteenth Century, N o . 89, Nov. 1892, pp. 6 9 9 - 7 0 2 . Joseph Chamberlain, 'Old-Age Pensions and Friendly Societies', The National Review, no. 143, Jan. 1895, pp. 5 9 2 - 6 1 5 . Chamberlain, 'Labour Question', p. 698.

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The campaign for old age pensions

Chamberlain recognised that, even among the more prosperous of the working class, there was a motivational problem in insuring against 'so uncertain and distant a result' as old age - unlike sickness, which was always present in people's imaginations. But this apparently rational calculation did not accord with reality: recent life-tables showed that survival rates from early adulthood to old age were in fact quite good: the proportion of 25-year-olds who survived to the age of 65 was 45 per cent in the case of men and 52 per cent in the case of women. Chamberlain thus acknowledged that Booth's universal, tax-funded scheme was 'logically defensible',31 and at times he almost seemed to be offering a 'citizenship' justification for pensions as of right for 'the veterans of industry', in rhetoric that evoked his 'ransom' speeches of the previous decade: The industrious poor have really some claim on the society that they have served and on the state as its representative. After a life of unremitting toil at a remuneration which has barely sufficed for daily wants, they ought not to be compelled to receive their subsistence at the cost of their self- respect.32 But in the end Chamberlain could not bring himself to approve of a scheme like Booth's that would require £21,000,000 to be raised in taxation. Even as late as 1903, he was declaring that 'the promise of universal pensions to everyone, without reference to previous character, would be the greatest blow ever struck at thrift in this country'.33 Hence for a long time his only envisaged option was a voluntary, contributory insurance scheme. He was remarkably naive on the possibility of the low-paid paying the necessary lump-sum deposit to start such a scheme, suggesting that 'in very many cases employers and friends, and charitable people, would gladly assist the insurer to commence his deposit, and that a great deal more might be expected from employers of labour and others in this direction.'34 Chamberlain was well aware, from having studied Booth's arguments, that such a scheme would do nothing for the most poverty-stricken elderly citizens who either could not afford contributions or who had irregular labour market records (in particular, casual labourers and women). But somewhat brutally he dismissed the criticism that his scheme would leave untouched 'the very poor or the submerged tenth' with the response that these classes of people were unlikely to survive to the age of 65. 35 He conceded that the majority of old age paupers were women; yet women were 'very seldom intempe31 33 34

35

32 Ibid., pp. 7 3 6 , 7 3 3 . Ibid., pp. 7 2 7 - 8 . Quoted in Fraser, Chamberlain, p. 2 3 5 . Royal Commission on the Aged Poor, 1 8 9 5 , vol. II, C - 7 6 8 4 - I , Minutes p. 6 6 5 . Chamberlain, 'The Labour Question', p. 7 0 1 .

of

Evidence,

Blackley, Chamberlain and Booth

73

rate', and were 'persons who by the very necessity of their lives are in the majority of cases almost precluded from saving'. But the especial and serious problem of feminised poverty was never properly confronted.36 Like Blackley, Chamberlain seems to have been primarily concerned with the remoralisation of the male breadwinner via a pension scheme that would encourage him to save when young;37 at times, this aim seemed more important to him than relieving poverty in old age. Another problem never fully resolved was the role of the friendly societies. Given their potential political power, they had to be incorporated as the operating medium of Chamberlain's proposed scheme and he did his best to assuage their fears by arguing that their current reluctance to provide old age pensions for their members was damaging their reputations. Yet at the same time, he repeatedly commented on their financial difficulties arising from increased sickness benefit claims, thus implying that they would be precarious and unreliable administrative agencies.38 Chamberlain's practical proposals received most cogent expression in the three schemes suggested by the parliamentary committee he set up in 1891 and chaired. First of all, there was a scheme to be operated through the Post Office: having saved a total of £2 10s Od before the age of 25, and making an annual payment of 10s Od, a person would be eligible at the age of 65 for a pension of 5s Od per week. Second, a higher initial deposit (£5) and an annual contribution of £1 could provide the same level of pension, plus provision for widows and children in the case of death before 65 (or a rebate if the subscriber remained unmarried). In both these cases, the state would contribute a deposit equal in amount to that of the subscriber. Third, there could also be a scheme for women: a pension of 3s Od per week at age 65 could be funded from an initial deposit of £1 10s Od at age 25, and subsequent annual subscriptions of 8s 8d.39 The 'labour programme' was much discussed in the general election campaign of 1892 (which put the Liberals into power until 1895). Once a cabinet minister (as Colonial Secretary) in Lord Salisbury's 1895 Conservative government, Chamberlain's room for public campaigning was much more limited, but he attempted to press the cause of pensions from within the cabinet. He had ventured to persuade Lord Salisbury to 36

37

38

39

Royal Commission on the Aged Poor, vol. II, p. 659; see also Chamberlain, 'Old-Age Pensions and Friendly Societies', p. 598. Joseph Chamberlain, 'Old-Age Pensions', The National Review, no. 108, Feb. 1892, pp. 7 3 6 - 7 . For example: 'Old-Age Pensions', p. 729; 'Old-Age Pensions and Friendly Societies', pp. 592, 6 3 9 - 2 . 'Old-Age Pensions and Friendly Societies', p. 611.

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The campaign for old age pensions

include Chamberlainite social reforms in the party's 1895 election manifesto (via the long 'Memorandum of a Programme for Social Reform' of 20 October 1894, which warned of the political threat of socialism), but the latter did nothing. As we shall see, Chamberlain also served on the 1893-5 Royal (Aberdare) Commission on the Aged Poor, giving evidence to it and even producing a minority report of his own in 1895. He was instrumental in appointing the Rothschild Committee and, according to his biographer, was angry at the committee's negative report of 1898. On 24 April 1899, he issued a promise in parliament that the government would introduce some form of legislation on old age pensions before they left office, and followed this up a month later with the appointment of the Select Committee of MPs under Henry Chaplin.40 He also piloted the 1897 Workmen's Compensation Act through parliament. However, it was difficult for him to get old age pensions discussed in a cabinet whose members considered the whole idea 'socialistic'. Despite some sympathetic noises, Lord Salisbury was always careful to distance himself from his colleague's more radical proposals. On the publication of the Chaplin Report in July 1899 Chamberlain made a public commitment to implement its recommendations, but the outbreak of the Boer War in October radically altered the political and fiscal situation, absorbing his and the cabinet's attention. Nevertheless, on 17 November 1899 - during a lull in the South African crisis - Chamberlain did try to secure cabinet agreement for two pension schemes. The first was non-contributory, targeted on a person aged 65 and over 'unable without assistance to maintain himself by his labour', and offered pensions of no more than 5s Od per week to those who had not received Poor Law relief in the past twenty years; the cost was to be borne by the local rates, supplemented by Treasury grants totalling £2,000,000 to £3,000,000 per annum. The second was limited to those who had contributed to a friendly society for at least twenty years, or to those few in number who had availed themselves of the Post Office contributory scheme.41 There remained, of course, the crucial problem of how to finance a pension scheme in a way that would not open the way to demands for a universal, tax-funded scheme. Even his voluntary insurance scheme needed a state subvention of at least £9,000,000 per annum, which Chamberlain refused to contemplate from raised taxes. The problem was that a new source of revenue had to be found. The ingenious 40 41

Garvin, Life, vol. Ill, pp. 6 2 5 - 6 . Memorandum by Joseph Chamberlain, 'Aged Poor', 17 Nov. 1899, Joseph Chamberlain Papers JC 6/3/4/14.

Blackley, Chamberlain and Booth

75

solution was a tax on foreign corn, and by the close of the 1890s Chamberlain was formulating a policy of imperial preference and tariff reform which, he hoped, could form the basis for policy alternatives to socialism. Distracted by the Boer War, however, Chamberlain could only return to the subject of pensions in 1903 - by which time the initiative had been wrested from his hands by socialists. He was aghast at their insistence that state pensions should be universal and taxfunded. Inexorably, Chamberlain's pension proposals began to get bogged down in the question of funding, and became lost in the wider debate over free trade versus protection. By his tariff reform campaign of 1903, he was to split his own party a second time.42 Chamberlain was felled by a stroke in July 1906, and this effectively removed him from national politics; but his ideas had become passe well before then - even by the time he presented his pension scheme in 1891. As Richard Jay observes, Chamberlain found his scheme liked by nobody: conservatives believed it to be too radical, socialists objected to its Gladstonian fiscal ethos, and the friendly societies remained suspicious.43 In particular, from the mid-1890s onwards the labour movement poured increasing scorn upon Chamberlain. The delays surrounding the Rothschild and Chaplin Reports struck them as no more than cynical procrastination, and to them he appeared opportunistic and merely reactive: for example, F. H. Stead pointed out that the Chaplin Committee was appointed one month after an old age pensions conference sponsored by the National Committee of Organised Labour was held in Chamberlain's home territory of Birmingham.44 Possessed of highly developed political antennae, Chamberlain tried to steer a cautious way through these rival positions. But his scheme was from the beginning flawed by one inherent logical contradiction: it justified itself on the extent of old age poverty, yet was designed to reward only the labour aristocrat who, of all the working class, was least likely to suffer poverty in old age. Like so much late nineteenth-century liberalism, Chamberlain's scheme was too little, too late. By the late 1890s, he found himself being overtaken by those very socialists against whom, two decades earlier, he had uttered his Cassandra-like warnings.

42 43 44

Fraser, Joseph Chamberlain, pp. 2 3 5 - 7 . Richard Jay, Joseph Chamberlain: A Political Study (1981), p. 178. Francis Herbert Stead, How Old Age Pensions Began to Be (c. 1910), pp. 5 2 - 3 ; for labour hostility, see Trades Union Congress Parliamentary Committee pamphlets, Mr. Chamberlain's Unredeemed Pledges (1903) and Mr. Chamberlain's Modern Fallacies (c.

1904).

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The campaign for old age pensions

Charles Booth Blackley's claim as the original inspiration of the old age pensions campaign owes more to the apposite timing of his proposal than to anything else. Chamberlain launched the pensions question on its political trajectory. But the most systematic empirical case came from a third figure - the pioneer poverty investigator Charles Booth. Booth was born on 30 November 1840, and died on 16 November 1916. His family background was one of financial security - his father was a prosperous corn merchant - and in the 1860s Booth founded his own shipping firm in partnership with his brother Alfred. In his youth, Charles Booth had been a radical (for example, he joined the National Education League), but he thereafter lapsed into an idiosyncratically conservative position; he was to remain somewhat disillusioned with party politics for the rest of his life, and had the knack of getting on personally with those whose views he did not share (such as Octavia Hill, H. M. Hyndman or Tom Mann). Most remarkable of all was the way that this conservative found himself a hero among socialists in the late 1890s, because of his espousal of universal, non-contributory old age pensions. The precise reasons why Booth decided to investigate poverty in the 1880s have been debated by historians. The Simeys' rather misleading view that Booth was spurred on by a claim by H. M. Hyndman's Marxist organisation, the Social Democratic Federation, that onequarter of the population of London lived in poverty has now been convincingly refuted.45 Like many eminent Victorians, Booth suffered periods of ill-health, self-doubt and melancholia, and it may be that there was an element of personal therapy in his compulsively detailed social survey work. In modern parlance, Booth was a 'workaholic'. He devoted long hours to his business, and enjoyed nothing better than writing up dense empirical publications like The Aged Poor in England and Wales (1894), obsessively quantifying social problems to the second decimal place. Again, there is something in explanations which stress Booth's interest in both Comtean positivism and new business methods (such as double-entry book-keeping); allied to a long-standing family interest in social issues, this excited his curiosity about the measurement 45

T. S. and M. B. Simey, Charles Booth, Social Scientist (I960), pp. 68-70; Peter Hennock 'Poverty and Social Theory: The Experience of the Eighteen-Eighties', Social History, no. 1, Jan. 1976, pp. 67-91; Rosemary O'Day and David Englander, Mr Charles Booth's Inquiry. Life and Labour of the People in London Reconsidered (1993), pp. 27-31; Englander and O'Day 'Introduction' in Englander and O'Day (eds.), Retrieved Riches: Social Investigation in Britain 1840-1914 (1995).

Blackley, Chamberlain and Booth

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of poverty and social problems, in which existing official 'blue books' were deficient. However, the most likely explanation is also the simplest. As a thoughtful capitalist, Booth was well aware from the turbulent events of the 1870s and the 1880s that new forces were at work in British society. The rise of socialism and unskilled trade unionism, the extension of democracy, the shift to what he called the 'new system' of larger industrial units, and all the other interlocking factors (outlined in the previous chapter) created the potential for a huge social and political upheaval. Significantly, Booth began his poverty investigation just about the time of the great demonstrations by the unemployed in London in 1886 and 1887. By the mid-1880s, he was involved with the clique of middle class social investigators and politicians in London who were concerned with the 'condition of England question': Rosemary O'Day and David Englander have shown how well 'networked' Booth was in the social politics of the metropolis, and from this myriad of contacts he became fully conversant with all the prevailing issues.46 Not surprisingly, his writings contain frequent anxious passages on the need to forge a synthesis between 'individualism' and 'socialism' or 'collectivism'. Booth first became interested in old age pensions in 1891, the year in which Chamberlain began publicising his scheme. His first public advocacy of pensions was on 15 December of that year, when he presented a paper on 'Enumeration and Classification of Paupers, and State Pensions for the Aged' to the Royal Statistical Society.47 According to one account, the paper received a very hostile reception from the audience: one witness called it a 'startling suggestion'. So intense was the discussion that a continuation meeting was held one week later, so that there could be time for more debate. In the intervening week, there were many attacks on Booth's idea. 48 Likewise, the memoir by Booth's wife records that 'not a voice was raised in favour of the proposal' at the second meeting, which was held in a thick, gloomy London fog that rolled into the hall and at times obscured the discussants. 49 However, it seems likely that there is an element of Booth-worship in both of these accounts, which seek to play up the daring originality of his proposal. With characteristic frankness, Booth himself acknowledged in his paper that several other pension proposals had preceded his (for example, by the National Providence League and by the Poor Law 46 47

48

49

O'Day and Englander, Booth's Inquiry, pp. 2 9 - 3 1 . Charles Booth, 'Enumeration and Classification of Paupers, and State Pensions for the Aged', Journal of the Royal Statistical Society, vol. 54, pt. 4, Dec. 1891, pp. 6 0 0 - 4 1 . Belinda Norman-Butler, Victorian Aspirations. The Life and Labour of Charles and Mary Booth (1972), p. 119. Mary Catherine Booth, Charles Booth, a Memoir (1918), p. 23.

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Reform Association). As we have seen, Blackley's scheme had been investigated by a House of Commons Select Committee in the mid18808, the German pension system had been introduced in 1889 and the Danish in 1891, and public discussion was growing. Joseph Chamberlain had launched his pensions proposal into the political world some nine months earlier, and considered that, by 1891, the whole issue was 'ripening' enough to be publicly acceptable.50 Again, the transcript of the discussion of Booth's paper (published in the Journal of the Royal Statistical Society) shows that a lively, critical discussion took place nothing more than any speaker to the Society would have expected from a well-informed audience of strong-minded people.51 What made Booth rather unusual is that, although a conservative in social and political matters, he realised from the very beginning that only a tax-funded, non-contributory state pension scheme - highly redistributive from rich to poor, and from men to women - would truly alleviate old age poverty. This gave his pension proposal a radical flavour, and was to throw him into the company of socialists in the late 1890s. But Booth was emphatically no socialist. The radical nature of his proposal reflected the urgency of the problem as he perceived it. Thus we need to probe more deeply to find out Booth's underlying motives. Like the socialists of the 1890s, Booth sought the universal 'endowment' of old age and used the language of rights to argue that the pension was a badge of citizenship. Even more striking was Booth's immediate realisation that poverty in old age was essentially a woman's problem: hence contributory schemes were a complete irrelevance. He wrote: It is held that those who have worked for a lifetime have a claim to something more than social charity, and however this argument may be regarded as to men, it has considerable force with respect to women, who have often spent lives of the most active and invaluable citizenship without ever having the smallest opportunity for saving.52 Tax-funded old age pensions would be redistributive to the poor on both class and gender lines, argued Booth: 'These arguments acquire double force when we consider how very large a proportion of the destitute old are women.'53 He pointed out that the overall ratio of 50

51

52

53

Chamberlain to Rev. W. H. Higgins, 16 May 1891, Joseph Chamberlain Papers, JC 6/ 3/4/4. 'Discussion on Mr. Booth's Paper', Journal of the Royal Statistical Society, vol. 55, pt. 1, March 1892, pp. 5 6 - 7 9 . Charles Booth, Pauperism, a Picture; And the Endowment of Old Age, an Argument (1892), p. 168. Ibid., p. 198.

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79

women to men aged over 65 on Poor Law relief was 176:100. (Women greatly outnumbered men in the case of outdoor relief, but there were more men than women in workhouses, reflecting both differing labour market status and the prevailing view that older men were less able to look after themselves.) Booth realised that it was utterly impossible for most of the working class to save adequately for old age. His researches told him how desperately most aged workers hung on to jobs rather than applying for Poor Law relief. Likewise, he quickly realised the impossibility of deciding 'deservingness' from the scraps of evidence of an old person's past life. A case can also be made for arguing that Booth's intellectual honesty forced him to acknowledge the incontrovertible power of his empirical evidence. 'Old age stands out plainly as the prevailing cause of pauperism after 65', he declared firmly in The Aged Poor in England and Wales.54" His detailed study of several London workhouses showed that in Stepney it was a principal cause in 32.8 per cent of cases of pauperism; and in St Pancras, 23.4 per cent of cases. Booth made telling use of Burt's and Ritchie's returns (see previous chapter), which revealed the progressive rise in the rate of pauperism in old age. In his evidence to the 1905-9 Royal Commission on the Poor Laws, he pointed out that fully half of all recipients of outdoor relief were aged 60+ and, of these, three-quarters were women.55 Booth concluded: 'When we consider how many of the poor are old, we cannot escape the conclusion that poverty is essentially a trouble of old age.'56 However, Booth was emphatically not interested in old age poverty for its own sake. Instead, old age poverty was a 'problem' in so far as it prevented the Poor Law being tightened up and restored to the punitive regime intended by the reformers of 1834. He was thus entirely in accord with the Local Government Board's 'crusade against outdoor relief and enthusiastically supported the strict Charity Organisation Society-influenced regimes in Poor Law Unions such as Bradfield, Brixworth and Whitechapel.57 With the aged poor removed, outdoor relief could be abolished and workhouses made more punitive; the full panoply of deterrence could be directed at the able-bodied male, whose industrial behaviour was the key to the revitalisation of British capitalism. Hence Booth approvingly cited examples of strict Poor Law Unions, which had produced 'marvellous' results. But the problem with past examples of strict discipline was that they had depended upon the 54 56 57

55 B o o t h , The Aged Poor, p . 5 4 . Charles B o o t h , Poor Law Reform ( 1 9 1 0 ) , p . 3 7 . Booth, Pauperism, a Picture, p. 148. Evidence b y B o o t h , Royal Commission on the Aged Poor, 1 8 9 5 , vol. I l l , C - 7 6 8 4 - I I ,

Minutes of Evidence, p. 575.

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The campaign for old age pensions

energy of one particular reforming individual on a local Board of Guardians; when that great administrator left, the Guardians reverted to laxness. What was needed was a new policy not dependent upon the whim of an individual, but upon a foolproof system - the Holy Grail sought by the reformers of 1834. 58 Booth thus argued: If we are to reduce poor relief everywhere . . . it can only be by first simplifying the problem with which the Guardians generally have to deal, and by then putting some pressure on them calculated to exercise a steady influence in the required direction. Both simplification and pressure, as I shall attempt to show, may be found in the endowment of old age, and the result should be the entire abolition of out-relief within measurable time.

'There must be no mixing of pensions and poor relief, argued Booth, vehemently opposing the alternative of more generous outdoor relief (perhaps as of right) to the aged as Very dangerous, far more so and more insidious in its dangers than would be any general pension system. It is a proposal without principle or finality, based solely on sentiment.' With outdoor relief abolished and state pensions introduced, the Poor Law could operate properly: If such a policy could be pursued throughout the land - if the administrative citadel were no longer undermined by old age, nor betrayed by the daily demands of the sick, nor assaulted in the name of the fatherless and the widow the change might be very great. Independence, self-respect, and prudence would be encouraged, and duty and charity take each its proper place.59 Workhouses would henceforth be occupied only by the able-bodied, and based upon 'progressive discipline; which would bring with it more laborious work and less comfort'.60 Thus when Booth described his aim as preventing pauperism 'by catching the poor on the downward grade before they have dissipated everything; acting exactly in the opposite way from out-relief, which insists upon the dissipation of savings before anything can be done', 61 the prime object of his concern was the sanctity of the workhouse as an agency of social discipline, and not the poverty of old people. The ideal of a strict workhouse regime was impossible to achieve if it had to apply to non able-bodied categories like the aged, the infirm, widows, children and so on. To be sure, Booth at times appeared to be arguing in a rather elliptical fashion from the point of view of the aged pauper, as when he said of workhouses that decent old people who found refuge there 'cannot but be associated with very questionable companions'.62 But his 58 59 60 62

Mary Catherine Booth, Charles Booth, p. 150. Booth, Pauperism, a Picture, pp. 179, 207, 210, 212. 61 Booth, Poor Law Reform, p. 41. Booth, Old Age Pensions, p. 50. Booth, Pauperism, a Picture, pp. 167-8.

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81

concern that workhouses were not appropriate places for old people was primarily a concern for the workhouse, not for the old person: a ratcheteffect liberalisation process in workhouse regimes was taking place because old people were 'unsuitable' inmates. For Booth, the problem was that 'pauperisation' had become clouded in meaning by being applied to the non able-bodied, especially the aged. His obsessive search for 'facts' was directed at this goal of reinvesting it with a clear operational utility so that it could be applied effectively to the young able-bodied. Hence he argued that a 'twelvemonth count' of old age pauperism was better than a 'one-day count' because 'our object is to estimate the extent of pauper degeneration': to measure repeated spells on relief by such a longitudinal analysis was essential because 'to ask more often is more demoralising than to receive continuously'.63 A clear distinction between the 'respectable' and the 'pauperised' needed to be re-established. In the absence of a state pension scheme, many 'respectables' had to apply for Poor Law relief in old age, thus making this distinction impossible. However, with a state pension scheme in place, the concept of 'pauperisation' would be rehabilitated. By contrast, conservatives - less far-sighted than Booth - argued that state old age pensions would merely pauperise every old person.64 Booth frequently held a virtually hereditarian view of pauperism. Like many later eugenists, he argued that pauperism could be an incipient condition which would lie dormant for much of the life course. Some individuals were 'would-be paupers' well before applying for Poor Law relief: the personal stories of pauperism he collected in Stepney showed the extent to which 'some who are very much pauperised in their character and surroundings may go without relief for several years together, and the same stories show how with old age there is a gradual settling down into permanent pauperism'. The problem of identifying the 'pauperised' was rendered even more problematic because of the difficulty of ascertaining the precise cause of old age poverty: deciding whether old age alone was a 'direct' or an 'indirect' cause was vexatious because old age aggravated other causes of poverty.65 (This was a critical comment made by C. S. Loch in the discussion after Booth's Royal Statistical Society paper on pensions.) Clearly, Booth believed that moral failings would reveal themselves as causes of pauperism much more often, if only the investigative tools were better: 'Sickness and old 63 64

65

Booth, The Aged Poor, p. 9. E v i d e n c e b y T h o m a s M a c k a y (Charity Organisation Society), Royal Commission Aged Poor, vol. II, p . 5 0 4 . B o o t h , The Aged Poor, p p . 1 3 2 - 3 , 164.

on the

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age are causes so overwhelming and obvious as to draw a curtain over what has gone before; behind that curtain we doubtless might find some whose previous life offered another explanation of their condition.'66 In short, it was intrinsically impossible to peer into an old person's past life and decide 'deservingness'. Octavia Hill expressed the problem eloquently, when asked how one might gather evidence on the needs of the poor in old age: I could only think that it could be accurately obtained from people who had lived for years among them. You see it is a very different thing from getting evidence of the present condition of affairs. If you attempted to get the evidence of outsiders, they can only go by hearsay, and of course the causes of pauperism are perhaps far back in the years that are long ago gone. The man has lost his opportunity of better work by bad temper when he was 20, and you meet him at 80, perhaps.67

This was an intensely frustrating situation for those who believed that moral failings were a major cause of poverty. Pauperism as an objective condition was difficult to define as long as Boards of Guardians, faced with the problem of relieving the aged, operated outdoor relief practices that varied so widely between strictness and laxness. In The Aged Poor in England and Wales, Booth pointed out that the rate of pauperism in old age could vary tenfold between Unions: the lowest rate discovered by him was 8 per cent, in the two Unions of Castle Ward and Brixwell; the highest was 84 per cent, in St Saviour's in Southwark. He believed that such variations correlated with local conditions only to a limited extent. Thus after surveying these wide variations he concluded that 'these facts are to a great extent such as elude analysis and defy summary treatment'. Even under similar social conditions, there were 'wide differences in the extent of pauperism, and very little to account for these differences'.68 If analysis was impossible, then so was effective Poor Law policy. Fine-tuning would achieve nothing beneficial. However, a radical solution in the form of state old age pensions would remedy the situation by lifting the 'respectables' off the Poor Law, revealing the incorrigible residue of 'pauperised' to be easily identified. We can see, therefore, that Booth's analysis of old age poverty was located firmly in the context of the problem of the young able-bodied male, and the need to rehabilitate the concept of 'pauperisation'. That this is not more often stressed is possibly due to the ostensibly radical nature of his pension proposal, and the paradox that a scheme so driven 66 67 68

Ibid., p. 12. E v i d e n c e b y Octavia Hill, Royal Commission on the Aged Poor, vol. I l l , p . 5 5 3 . B o o t h , The Aged Poor, p p . 4 1 9 - 2 0 .

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by conservative motives was eagerly taken up by socialists. From the outset, Booth criticised Blackley's and Chamberlain's contributory schemes as both inadequate and involving unacceptable levels of compulsion. To be distinct from Poor Law relief (and hence restore the Poor Law to virtue), state old age pensions would have to be universal, and non-stigmatising; if universal, they would have to be compulsory; if compulsory, they would have to be tax-funded (Booth suggested 3d on income tax, plus Vid per lb. import duty on sugar: together they would yield £12,000,000). There could be no gradual build-up to full rights: the scheme would have to provide full benefits immediately. Sixty-five would be the most appropriate qualifying age, as there was general agreement that that was when 'active working life' ended and it was 'the age at which pauperism increases by leaps and bounds'. Booth initially suggested an old age pension of 5s Od per week to the 1,323,000 men and women in England and Wales aged 65+ in 1891, at a total cost of £17,000,000 per annum. Later there were suggestions for other alternatives such as 7s Od per week for all from the age of 70 (£20,684,082 total cost), 4s Od from 65 (£19,513,009), or 2s 6d from 60 (£19,202,560).69 In several interesting respects, Booth was highly prescient. He made a tentative stab at measuring the health status of the aged.70 His advocacy of state pensions partly rested upon the newly-emerging 'underconsumptionist' economic arguments of the 1890s.71 He discussed what would now be called the issue of 'generational equity' - whether the young (some of whom would not survive to old age) should be expected to pay for the old in a tax-funded, pay-as-you-go scheme. He frankly confronted the central issue that, if a scheme were to be effective (for example, in tackling old age poverty immediately), it would necessitate wealth redistribution from rich to poor via tax funding. Booth estimated that the 'break-even point' would be an annual household income of about £150; above that, there would be redistribution, and below it there would be net gain. He was aware that pension costs would rise as the population aged. And he raised the question of the effect of pensions on wages (an issue that was to grow in importance in the future): this was 'a very serious charge and one which demands very serious consideration and discussion'. Somewhat optimistically, Booth denied that the pension would encourage employers to cut the wages of older 69 70 71

Ibid., p p . 196, 2 2 7 , 2 3 5 - 6 ; B o o t h , Old Age Pensions, p . 5 3 . Booth, The Aged Poor,?. 3 5 5 . A l o n K a d i s h , ' C h a r l e s B o o t h as a n U n d e r c o n s u m p t i o n i s t E c o n o m i s t ' , in E n g l a n d e r a n d O ' D a y , Retrieved Riches, p p . 8 9 - 1 0 2 .

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workers: instead, he argued, pensioned workers would be able to hold out for higher levels of pay.72 Booth's motives in campaigning for a universal state old age pension system were thus complex and oblique. They were rooted in his political conservatism: pensions were really an adjunct to, and necessary condition for, the reform of the Poor Law to render it more punitive and harsh in dealing with young able-bodied males. But Booth had opened up a hornet's nest, for the radical, redistributive implications of his proposal made it increasingly popular with socialists in the 1890s. From them was to come a very different justification for a state pension scheme. 72

Speech by Booth, Old Age Pensions. Verbatim Report of the Proceedings at a Conference,

1899 (1899), p. 7.

The opposition of the Charity Organisation Society

Until the mid-1890s, the campaign for old age pensions was a broadly conservative movement - part of a raft of proposals aimed at restoring the Poor Law to administrative virtue and imposing harsher discipline upon the able-bodied male; its conservatism was also evident in the unwillingness of pension advocates (Booth excepted) to contemplate anything other than contributory insurance funding. However, from the mid-1890s onwards, the labour movement eagerly and gratefully took up the issue of old age pensions and turned it into something very different. Booth was the first to cross the ideological Rubicon and support the labour demand for non-contributory, universal pensions; others (such as Canon Barnett) followed him. But until the mid-1890s the old age pensions movement was hampered by several enormous obstacles. As we have seen, the inherent limitations of all contributory insurance schemes was one. Another was the perceived impossibility, in the political world of Gladstone and Salisbury, of raising the public finance necessary to fund even a limited contributory scheme like Chamberlain's. A third important obstacle was the opposition of two interest groups - the Charity Organisation Society and the working-class friendly societies. For very different reasons, these two powerful vested interests mounted a strong rearguard action against state old age pensions. By the end of the 1890s, however, the opposition of each was waning, and the initiative had been seized by socialists who viewed pensions as a piece of radical social policy. This chapter will consider the first of these interest groups. The origins of the Charity Organisation Society The founding of the Charity Organisation Society (COS) in 1869 has been ably analysed by a number of writers, and needs no more than a brief mention here.1 It represented, on the one hand, yet another 1

Most notably by Charles Loch Mowat, The Charity Organisation Society 1869-1913. Its

85

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chapter in the evolution of neo-Malthusianism and classical economics as applied to welfare - an intellectual tradition stretching back to Thomas Hobbes, David Ricardo, Adam Smith, the 1834 Poor Law Report and practitioners such as Thomas Chalmers in Glasgow in the 1820s and William Rathbone in Liverpool in the 1860s, finally reappearing on the British political agenda in the 1980s and 1990s. More specifically, however, the COS grew out of upper middle-class fears over a series of inter-connected political and economic crises in the late 1860s. At the same time, structural changes in the labour markets and the social ecology of all large cities (particularly London) were worsening the lot of the casual labourers, causing a widening polarisation between rich and poor, temporarily increasing the rate of pauperism, and renewing fears of the 'dangerous classes' (manifested in concerns over the way that the maladministration of existing City of London charities had allegedly spawned a class of professional beggars). As Stedman Jones has put it, the founders of the COS perceived themselves as a re-established 'resident gentry', restoring the balance of class forces.2 The founding of the COS took place in April 1869. A few months later there was issued the important circular to Boards of Guardians by the President of the central Poor Law Board, George Goschen, instructing them to co-operate more fully with local charities: the Poor Law was to relieve only the 'undeserving' in workhouses; private charity would relieve the 'deserving'. In this way, outdoor relief could be reduced and perhaps eventually abolished. It is quite clear that the socially well-connected founders of the COS knew their way round the corridors of Victorian government: as Helen Bosanquet was later to admit of the 'Goschen Minute' of 20 November 1869, 'if this document was not actually drafted in the offices of the Society, it was nevertheless the direct outcome of its deliberations and conclusion'.3 The aim of the COS was thus to establish a vast network of control over the disbursement of all financial help to the poor and destitute. This was to be effected by the 'capture' of local Boards of Guardians: the COS initiated vigorous blood-curdling campaigns in key areas to try and persuade the extremely limited and middle-class local government electorate to vote in their members as Guardians, and they took full advantage of the fact that some Guardians could be nominated.

2

3

Ideas and Work (1961). A recent fine work is Robert Humphreys, Sin, Organised Charity and the Poor Law in Victorian England (1995). Gareth Stedman Jones, Outcast London. A Study in the Relationship Between Classes in Victorian Society (1971), pt. III. Helen Bosanquet, Social Work in London, 1869 to 1912. A History of the Charity Organisation Society (1914), p. 266.

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The COS ideology The ideology of the COS has been subjected to thorough analysis, and needs no more than a brief outline here. The Society boasted a number of adept publicists, who have left to posterity a full exposition of its philosophy: its energetic secretary between 1875 and 1913, Charles Stewart Loch; the neo-Malthusian Thomas Mackay (who wrote with especial wit and pungency); the housing reformer Octavia Hill (somewhat idiosyncratic, and rather on the fringes of the Society); and Helen and Bernard Bosanquet (the former capable of interesting and reflective analysis). According to its highly individualist philosophy, social problems were ethical in origin - the result of moral choices freely exercised by rationally calculating hedonistic individuals. Like the authors of the 1834 Poor Law Report, the COS ideologues made a clear analytical distinction between poverty and pauperism. The former was not a social problem: it was, instead, the inevitable outcome of those marked social inequalities that spurred individuals on to greater efforts at self-improvement, thus benefiting the community as a whole. Only if poverty had reached a state of abject destitution, and the individual was morally blameless, would the COS help. By contrast, pauperism and dependency were the great social and moral evils which would inexorably grow unless the conditions for receipt of Poor Law relief (in particular, outdoor relief) were made as unpleasant, punitive and stigmatising as possible. Pauperism was thus a degraded mentality^ or, in Thomas Mackay's medicalised metaphor, 'a disease requiring scientific treatment'.4 Hence C. S. Loch argued that 'our business should not be with the poor as such, but with those who are in distress or destitution or who have in them the seeds of pauperism'.5 Poverty was thus not economic, it was attitudinal: as that COS stalwart Albert Pell put it, 'it is not the amount which a man earns a week that is the measure of his condition, it is whether he has been so trained as to be able to live below his income.'6 Likewise, Thomas Mackay argued that 'human happiness and the right ordering of society' depended largely upon 'a recognition and acceptance of the doctrine of personal responsibility'; for this to happen, 'the spirit of dependence has to be exorcised'.7 If the inculcation of personal responsibility was the only answer to social problems, then 4 5 6

7

Thomas Mackay, Methods of Social Reform (1896), p. 37. C. S. Loch, Charity Organisation (1892), p. 12. Statement by Pell at the 1878 Central Poor Law Conference, quoted in a tribute to him, in Poor Law Conferences Held in the Year 1899-1900 (1900), p. xix. Mackay, Methods, pp. 9-10.

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clearly outdoor relief was potentially destructive of the whole fabric of society, since it fatally corrupted the recipient. In modern parlance, it set up a dysfunctional 'incentive structure'. To the COS leaders, each individual was unique, with a wholly personal set of wants and desires. Society was composed of competing individuals, and remedial intervention should be directed at the encouragement of this individuality. In this way, communities would be welded together into self-sustaining units. Social casework would thus be precisely tailored to an individual's especial circumstances, utilising the resources of family, friends and neighbours so that 'independence' and self-reliance would be encouraged: where money was given, it might be in the form of a loan rather than a potentially demoralising gift. Slowly, all outdoor relief would be abolished and replaced by scientific charity. All ideologies are contradictory, and the COS's was no exception. It is instructive to pause briefly and examine some of these contradictions, for they are highly relevant to its position on state pensions. The first was the clash between moralism and scientism. On the one hand, COS leaders frequently took a position on social issues that stressed the mystical, emotional and ultimately immeasurable quality of human relations. Most ordinary people, they argued, lived by feelings and emotions, and not by the tenets of Comtean positivism. This tendency was especially evident in Octavia Hill, whose digressions on social problems were anecdotal and impressionistic in the extreme - a tribute to her sentient nature and her conviction that human relations could not be quantified, they could only be felt. In a less mystical form, this position stemmed from the central tenet of neo-Malthusian classical economics that social analysis should start not from raw empirical data but from certain immutable laws of human psychology derived from carefully observed social behaviour - such as the pleasure/pain principle: empirical data were useful only in so far as they verified these laws. Hence Thomas Mackay observed approvingly that C. S. Loch's opinions of Poor Law issues took it as axiomatic that pauperism should be reduced: Loch's opinions have been arrived at independently of statistics. He has adopted the view of the Poor Law experts which is based on administrative experience, and on a careful analysis of human nature. Hitherto it has not been thought necessary to defend the position by elaborate statistics.8 Loch himself, when confronted by Charles Booth's dense empiricism in The Aged Poor in England and Wales, argued that the statistics there presented showed clearly 'the large play of personal motives and friendly 8

Ibid., pp. 223-4.

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and family feelings that make up the reality of most of our lives, and are in a sense important economic factors'.9 As we shall see, the traditionalist COS leaders poured sarcasm and scorn on Booth's statistics on old age pauperism, believing - with some justification - that Booth's was a spurious empiricism concealing political expediency. Yet, on the other hand, COS leaders were capable of engaging their opponents in convoluted statistical arguments, and were remarkably successful in this. C. S. Loch in particular showed no qualms in presenting elaborately empirical papers to expert audiences like the Royal Statistical Society. Likewise, COS activists argued that theirs was a dispassionate, 'scientific' charity, dependent upon 'method' and meticulous recording of applicants' circumstances through detailed casework. This combination of moralism and empirical analysis was very evident in the COS's case against state pensions. There were, too, intriguing gendered paradoxes in the Society's work. Most of the casework and visiting was performed by women; men ran the committees. 10 The Society's male figures, such as Bernard Bosanquet, seem to have found it awkward and embarrassing to encroach upon the domestic terrain of the working-class poor.11 The COS provided an invaluable training-ground for many upper middle-class women (such as Eleanor Rathbone) who later entered public life, and it stressed the importance of women in holding together the working-class family. But this was always as a dependant of a male breadwinner. The working-class woman's function was to ensure the efficient reproduction of the family: Helen Bosanquet argued that poverty was 'mainly a woman's problem', requiring 'a woman's remedy' of better domestic skills rather than higher male wages. 12 As we shall see, the marked feminisation of poverty in old age was attributed to the past failing of a male breadwinner. A final contradiction worth noting is the way that overt class motivation - manifested in quite explicit fears of working-class revolution and in welfare recipes that sought to impose draconian social controls on the able-bodied male - was contrasted by an emphasis on citizenship and the essential commonality of interest between classes. The COS provides us with one of the first uses of the concept of citizenship as applied to welfare. 'Bridge-building' between the social classes was a frequently 9

10 11

12

C. S. Loch, 'Mr. Charles Booth on the Aged Poor', Economic Journal, vol. 4, 1894, p. 468. Jane Lewis, Women and Social Action in Victorian and Edwardian Britain (1991), p. 10. A. M. MacBriar, An Edwardian Mixed Doubles: The Bosanquets versus the Webbs: A Study in British Social Policy 1890-1922 (1987), pp. 6-7. Helen Bosanquet, 'Physical Deterioration and the Poverty l i n e ' , Contemporary Review, vol. 85, Jan. 1904, p. 73.

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stated aim, and the COS's moral exhortations were infused with a rhetoric of reconciliation. However, the residuum of casual poor and the pauper class were ruthlessly excluded from this common citizenship. And the 'classless society' was to be achieved by the working class gazing upwards admiringly at the urban gentry. Wrote Helen Bosanquet: The best chance of permanent progress for any class is such a rise in its income as will enable it to emulate successfully the mode of life of the class just above it . . . It is probable that the worst cases of degradation from increase of income have been where the recipients have not been in contact with a superior class near enough to serve them as a guide.13 These and other contradictions made the COS philosophy quite complex, and it is thus important not to portray it in terms of caricature. A further complicating factor is that, from the 1890s onwards, there opened up serious ideological fissures within the Society as more liberal and politically astute members rebelled against the inflexibility of the 'old guard' leadership. Many of these 'liberals' had previously been enthusiasts for the Society's traditional values, but by the mid-1890s they were seeing those rigid values as less and less relevant to the changing needs of British capitalism and political culture (particularly with the advance of socialism in the 1890s). The central issue in this ideological split was old age pensions, and it will be explored in greater detail later in this chapter. Ultimately COS ideology was one of pure unfettered free market capitalism, dedicated to the defence of a social organisation in which private property was held by a tiny minority at the apex of the class structure and redistribution of wealth and income was to be minimised. It was a tribute to the COS's political backwardness that its leaders made no attempt to disguise this, even in the changed political culture of the 1890s. All forms of state intervention (notably the Poor Law) were anathema because they redistributed wealth from rich to poor; social casework would impose moral and material control over the most potentially dangerous section of the working class; the abolition of outdoor relief would lower wages, thus reducing the unit cost of labour; the reproduction of intact, internally controlled working-class families would provide the stability in which capital accumulation could best take place. Thus Thomas Mackay's verdict was that the Poor Law was a 'narcotic' on the 'natural thrift and acquisitive instincts of the poor'. 14 Welfare was to be provided not by redistribution from rich to poor, but by inter-generational transfers within the extended family: 13

14

Helen Bosanquet, The Strength of the People. A Study in Social Economics (1902),

pp. 96-7. Mackay, Methods, p. 24.

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Through the welding power of the family life the three generations form one homogenous whole, with identical interests; nowhere is there any sharp break dividing us from the past and future. Our welfare was at one with that of parents and grandparents, and is one with that of children and grandchildren.15

The creation of an 'inclusive', harmonious society was to be achieved not by enforced redistribution but by the slow growth of prosperity and the 'natural', organic development of private, self-help institutions such as the friendly societies: this would inexorably spread the ownership of private property to more and more citizens and would constitute 'the true socialisation of wealth'. Participation in the capital accumulation process - by hard work, saving and property ownership - would provide a defence against the easy temptations of democracy. By the 1890s, the older COS leaders greatly feared the extension of democracy. The nearhysteria with which they greeted the 1894 Local Government Act (which opened up the franchise for Boards of Guardians) was partly a tribute to their political backwardness, but it also arose from their feeling that, as yet, insufficient numbers of the working class were incorporated into the capitalist process. Thus Thomas Mackay feared that 'uninstructed public opinion' would force politicians to outbid each other with 'illusory electoral promises', creating the danger of 'a strong democratic government, animated by the prevalent spirit of philanthropic rapine, and officered, as seems inevitable, by wildcat politicians of all parties.'16 As the 1890s progressed, and socialism emerged as a viable political force, the class self-interest of the COS 'old guard' became more pronounced and their defence of private property became more explicit. Whereas the COS leaders had dominated the social debates of the 1870s and 1880s (their basic principles being in accord with what the vast majority of the middle classes believed), by the 1890s they began to panic at what they perceived as socialism's hidden agenda - an agenda that would first involve the introduction of expensive state social policies, then state control of all forms of economic activity (all would be 'servants of the state'), and finally the confiscation of wealth and private property. Hence Thomas Mackay, writing in the mid-1890s at the peak of the COS's internal crisis, protested against 'the absolute harmfulness of the collectivist principle, which lies at the root of the English Poor Law system'; the new proposals for extending this principle via more collectivist social policies 'amount in the aggregate to a policy of using taxation not as a means of providing for the public services, but as an 15 17

Bosanquet, The Strength, pp. 182-3. Ibid., p. 2.

16

Mackay, Methods, pp. 1 0 , 2 0 - 1 , 4 1 - 2 .

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instrument for redistributing wealth'.17 Likewise, Charles Percy saw the Poor Law, public health and state education as 'socialistic' in principle the thin end of a dangerous political wedge.18 'Under a complete system of socialism the whole population would be a kind of glorified paupers', warned J. St Loe Strachey, and C. S. Loch saw old age pensions as merely a prelude to 'socialistic' proposals for the regulation of wages by the state. 19

The case against old age pensions Bearing all this in mind, it is not hard to understand why the COS leaders were so opposed to state pensions. Their arguments operated on two levels: those based on cardinal principles of political economy; and those based upon a powerful and ingenious empirical case.20 COS leaders argued that the knowledge that a 'free' state pension awaited one at the end of a working life would fatally erode workingclass thrift, self-reliance and prudence. Relieved of the fear of a povertystricken and degraded old age spent in the workhouse, the feckless working-class man or woman would neglect to accumulate savings during his or her adult years. Even a contributory scheme, if organised by the state, would destroy independence. The 'natural' bonds of support from family, neighbours and community would wither; mutuality would thus be destroyed, and with it would go social stability. A vast section of the working class would be 'pauperised' by the grant of a pension over a certain (arbitrarily-chosen) age. Thus the concept of 'pauperisation' itself - so essential to maintaining social discipline and the work ethic - would lose its meaning. COS leaders were always deeply concerned about the continued existence of outdoor relief (though pointing with some satisfaction to its steady reduction); state pensions would be outdoor relief by another name, and would lead on to demands that more parts of the Poor Law should be liberalised perhaps leading to the ultimate nightmare of freely obtained outdoor relief for the unemployed young able-bodied. From this, it was but a short step to a complete socialist transformation of society. The cost of 17 18

19

20

Ibid., p. 2. Charles Percy, 'Old Age Pensions', Poor Law Conferences Held During the Year 1893 (1894), p. 45. J. St Loe Strachey, 'Introduction', in The Manufacture of Paupers, A Protest and a Policy (1907), p. 5; C. S. Loch, Chanty and Social Life (1910), p. 351. For an initial guide to sources used in the following section, and as a stimulus to ideas, I am indebted to an excellent article by J. H. Treble, 'The National Leadership of the Charity Organisation Society, Old Age Poverty and Old Age Pensions in Britain 1878-1908', Journal of the Scottish Labour History Society, no. 18, 1983, pp. 1 8 - 4 2 .

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universal, tax-funded pensions at the age of 65 was bad enough, involving a scale of income redistribution that was seen as confiscatory; what lay at the end of this political road was too awful to contemplate. 'There is no claim to relief less worthy of acceptance than the claim of indigent old age', argued The Charity Organisation Review in 1894, completely reversing the growing liberal orthodoxy that the aged should be treated differently from young able-bodied males.21 There was nothing special about old age: no logic determined that the age of 65 ushered in 'the estate of life to which state subsidy should begin', especially as the COS maintained that nearly half of old age pauperism commenced before the age of 65. If the discipline of economic independence was abandoned in the case of old age, then it would soon be abandoned at other points in the life course. 22 Interestingly, the COS put this principle into practice in their administration of the Poor Law in Whitechapel. Normally Boards of Guardians would take the age of 60 as the point at which a pauper would be classified as 'not able-bodied', but in Whitechapel each case was decided upon its merits, depending upon whether an applicant appeared capable of work. A fixed age definition would set up an incentive to deceive. Said William Vallance, clerk to the Whitechapel Board of Guardians: One man at 60 may be very aged and enfeebled and infirm; another man may be quite as capable of getting his living at 60 as he has been for some years. I should rather look with disfavour upon the age being fixed, inasmuch as it would offer an inducement to the paupers themselves to deceive as regards their age. You have to depend very largely upon their statements, but as it is, you can form your own judgement, looking at the man, or looking at the woman.23 Most venom was directed at the Booth pension proposals: these 'free and universal pensions' would be appallingly wasteful, would raise • taxation, would disturb investment and would 'add to our present pauperism a sort of hybrid and disguised pauperism'.24 But the Blackley and Chamberlain insurance-based schemes were also attacked as unrealistic, objectionable and impractical. They could only apply to the more prosperous sections of the working class, and these should be saving of their own accord. Thus Charles Fremantle said of the Chamberlain scheme, By it only the willing fish would be swept into the net, while the too numerous small fry anxious to elude the cast of the fisherman, whose especial object it 21 22

23 24

Editorial, Charity Organisation Review, vol. 10, no. 108, Jan. 1894, p. 40. Mackay, Methods, p. 193; 'Notes of the M o n t h ' , Charity Organisation Review, vol. 8, no. 88, April 1892, p. 143. Report of the Royal Commission on the Aged Poor, 1895, vol. I, C-7684, p. xi. 'Notes of the M o n t h ' , Charity Organisation Review, vol. 8, no. 85, Jan. 1892, p. 18.

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nevertheless is to secure them, are allowed to swim away at their ease in the sea of thriftlessness and prospective pauperism.25 Likewise, Thomas Mackay argued that all insurance pensions were pointless because so many of the poor would not save for old age (as the low take-up of Post Office deferred annuities showed). He claimed that only one out of every 1,023 friendly society members were aged paupers; this showed how thriftless were the vast majority of aged paupers.26 The idea of 'state-organised thrift' was a contradiction in terms, and would have dangerous consequences since it would only stimulate demands for universal, tax-funded pensions; a state subsidy to the friendly societies would disturb the natural development of workingclass saving, and would eventually put the societies under state control; all state-provided pensions would lower wages, as the pre-1834 'Speenhamland' allowance system had done; pensions of any kind would discourage filial support. A final interesting point of principle made by the COS related to family responsibilities: the fact that women outnumbered men in the aged pauper population demonstrated that the remedy for this 'feminisation of poverty' in old age lay in the encouragement of male breadwinners to make adequate provision (during their working years) for the old age of their spouses.27 Helen Bosanquet's conclusion was that 'The most important institution, then, for the maintenance of old age is the natural and legal provision made through the family; and this relation, as I have said, generally suffices, unless it is weakened by some external agency.'28

The empirical case These arguments of principle were often conveyed in repetitive assertion that was strident and formulaic. By contrast, the COS's empirical case was coolly and impeccably statistical, based upon several clever arguments. The first was that the overall rate of pauperism was declining. Thus nothing needed to be done, other than continuing with the slow, difficult and unspectacular work of remoralising the working-class. By this means, pauperism would in time be extinguished. We should note that, until the 1890s, the mood of the COS was highly optimistic, since 25

26

27

28

Charles Fremantle, 'Old-Age Pensions and Pauperism', Charity Organisation Review, vol. 9, no. 9 3 , Sept. 1 8 9 2 , p. 3 2 1 . Mackay, Methods, pp. 1 8 4 - 5 ; T h o m a s Mackay, 'National Pensions', Charity Organisation Review, vol. 8, no. 8 8 , April 1 8 9 2 , p. 128. C. S. Loch, 'Pauperism and Old-Age Pensions', in Bernard Bosanquet (ed.), Aspects of the Social Problem ( 1 8 9 5 ) , p. 153. Bosanquet, The Strength, p. 2 4 1 .

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the natural play of market forces seemed to be steadily increasing working class prosperity and diminishing pauperism. Within the overall rate of pauperism ,was the rate of old age pauperism. As was discussed in the introductory chapter, statistics of pure old age pauperism did not strictly speaking exist before 1890 (when Burt's return appeared), but it was possible to obtain a general measure of progress from the pauperism rate of those aged 60 or above (which included those who were paupers because of infirmity). From this, it could be deduced that old age pauperism was also declining, though at a slower rate than for other groups. Between 1861 and 1901, the rate of decline of pauperism for the three principal groups had been: those aged under 16, 55 per cent; those aged 16-59, 60 per cent; those aged 60+, 36 per cent. 29 (All pauperism rates rose slightly in the early 1900s, confirming the COS's fears that liberalisation of administration and talk of reform had fatally raised popular expectations and produced a growing 'pauperisation'.) The COS's explanation for the slower rate of decline of aged pauperism was highly ingenious. Loch argued that the aged of the 1890s were the generation who had spent their childhood and much of their working adulthood under the pre-1870s Poor Law regime (before the formation of the Local Government Board and its 'crusade against outdoor relief): during their formative years they had thus become more 'pauperised' by lax administrative policies, compared with later generations. Since pauperism was learned behaviour - a rational response to 'over-generous' welfare incentives - it became ingrained into an individual's character and could not easily be removed. After 1871, however, the practical and moral guidance of the COS, plus the stricter and more professional regime of the Local Government Board, both effected a change. Thus as successive generations aged into the future, the benefits of stricter relief policies would become apparent. Old age poverty would eventually disappear.30 The best policy was therefore one of continuing to reduce outdoor relief and allowing there to take place what C. S. Loch called 'the spontaneous growth of institutions suited to the actual wants of the people'. 31 In addition, Helen Bosanquet argued that the existing generation of aged were a generation who had experienced long lives of toil, since they had spent their childhood in the labour market (before factory legislation and the extension of state 29

30

31

C. S. Loch, 'Statistics of Population and Pauperism in England and Wales', Journal of the Royal Statistical Society, vol. 69, pt. II, June 1906, p. 292. Loch, 'Pauperism and Old-Age Pensions', pp. 135-6; Loch, 'Mr. Charles Booth' pp. 4 8 4 - 5 . Memorandum by C. S. Loch, Report of the Royal Commission on the Aged Poor, vol. I, p. cxvii.

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elementary education): future generations of aged would be less 'wornout', and would thus be less poverty-stricken in old age. 32 Thus despite its pessimism on the ease with which the working class could be corrupted by 'doles', the COS was actually optimistic regarding the future - providing that laissez-faire continued. As measured by friendly society membership, savings, bank deposits, rising real wages, a shorter working week, reductions in crime, increasing per capita food consumption, and other indicators of prosperity and capital accumulation, much improvement had been made. 33 Interference would only upset the balance of market forces. We should note that this analysis by the COS failed to appreciate what other social observers were noticing: that jobs for older workers were beginning to disappear. The second plank of the COS's empirical argument was a critique of those very pauper statistics. The pauperism rate was said to be essentially artefactual, being a product of the relative laxness or strictness of different Boards of Guardians in administering relief. The pauperism rate was thus not a proxy for true poverty. Where liberal critics of the Poor Law argued that the pauperism rate was a serious under-estimate of poverty, the COS argued that it was a gross over-estimate. All pensions proposals had one thing in common, argued Thomas Mackay: they started from the assumption that old age pauperism was excessive.34 This, however, was fallacious. If the pauperism rate was in fact just 'evidence of social demoralisation', then it was no basis for policy prescription.35 Statistics such as Burt's return merely indicated 'certain eccentricities of administration'.36 'A Union can have as many paupers as it chose to pay for', was the comment by another COS member.37 In support of this proposition, the COS proudly cited the instances of Boards of Guardians they had taken over and run themselves. Their achievements in this important area had in fact been much less successful than they had hoped for in the glad confident morning of 1869. Despite sympathetic help from the bureaucrats of the Local Government Board, at the peak of its success only sixteen Boards of Guardians were under COS control - a tribute to the amount of grassroots opposition the COS encountered. Nevertheless, these COScontrolled Poor Law Unions were held up as shining beacons of administrative virtue, and an indication of what could be achieved 32 33 34 36 37

Bosanquet, The Strength, p. 2 3 4 . Mrs Bernard Bosanquet, The Standard of Life, and Other Studies ( 1 8 9 8 ) , p. 2 3 . 35 Mackay, 'National Pensions', p. 125. Loch, 'Statistics of Population', p. 2 8 9 . Mackay, Methods, p. 167. C o m m e n t by Sir J. Athelstane Baines, 'Discussion on Dr. C. S. Loch's Paper', Journal of the Royal Statistical Society, vol. 6 9 , pt. II, June 1906, p. 3 1 7 .

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nationally if only there was a will to do so. The most often cited paragons were Brixworth, Bradfield, Whitechapel and St George's-in-the-East. In these Unions, the number of paupers on outdoor relief had been reduced to infinitesimal amounts by the strict application of COS principles. Frequently, once the COS gained control of a Board of Guardians, no new cases of outdoor relief would be permitted, and every effort would be made to remove existing applicants from the case load. Medical relief would be granted only on loan, and the 'offer of the house' would be strictly applied. The aim was to provide relief only within the workhouse. The results appeared to be a striking vindication of the COS. For example, C. S. Loch contrasted the cases of Brixworth (a COScontrolled Union, whose reformed regime had been started by Albert Pell) and Stockbridge (non-COS), both of which had almost identical pauperism rates in 1861 (6.6 per cent and 5.9 per cent respectively). By 1891, these had fallen to 0.8 per cent and 4.7 per cent respectively. The contrasting rates of decrease (90 per cent and 27 per cent) showed, argued Loch, what could be achieved by 'wise' COS administration.38 Even more spectacular was Whitechapel, that jewel in the COS crown, where the reforming spirits had been Canon Samuel Barnett and William Vallance (clerk to the Guardians). The number of indoor paupers relieved there had been 1,419 in 1870, and by 1894 it was 1,623 - very little difference. However, the numbers on outdoor relief had been reduced over the same period from 5,339 to only 30. In 1870 the proportion of all Whitechapel paupers on outdoor relief had been 79.0 per cent; by 1894, it had shrunk to 1.8 per cent. By contrast, in Bethnal Green (contiguous to Whitechapel and sharing many of its social characteristics) relief was disbursed carelessly and 'the virus of pauperism' had spread.39 Again, in COS-controlled Bradfield the number of outdoor paupers had been cut from 999 in 1871 to 18 in the mid-1890s; likewise, the pauperism of those aged 60 or over had been reduced from 1 in 2.8 of that age group in 1871 to 1 in 25.1 in 1892. It was claimed that, in all such transformed Unions, the virtual abolition of outdoor relief had resulted in increased membership of friendly societies and medical clubs, higher wages and greater willingness on the part of families to support their older relatives.40 This was exactly what the COS believed could be achieved at national level. There were other reasons, argued the COS, why the aged pauper statistics should be treated with the deepest suspicion. Generally, the pauperism totals were swelled by minor and trivial items of outdoor 38 40

39 Loch, 'Mr Charles Booth', pp. 479-81. Mackay, Methods, pp. 70-7. Mackay,'National Pensions', pp. 125-6; Bosanquet, The Strength, pp. 177-8.

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relief, which were no indication of really acute poverty. In reality, there were degrees of pauperism, ranging from a bottle of medicine (which would appear on the outdoor relief statistics), or a shilling supplement to other earnings, right through to full indoor relief for an utterly infirm and incapable person. Only the last was a true indicator of pauperism: outdoor relief should thus be excluded entirely from consideration.41 Further, C. S. Loch argued that 46 per cent of paupers aged 65 or over had been paupers before the age of 65: thus even if one accepted the highly artificial definition of 65 as 'old age', many who were notionally 'aged paupers' were not paupers primarily because of old age. In an ingenious exercise, he applied this reductive process to Stepney. In April 1889, Stepney had 1,129 persons on Poor Law relief, of which 400 were aged 65+. Of these 400, 181 had been chargeable before the age of 65, leaving only 219 chargeable after that age. Of these, 76 were paupers because of sickness. Removing other categories, Loch calculated that only 123 out of the original 400 were paupers solely because of old age a proportion of 31 per cent. If the Stepney figures were applied nationally, then only some 5 per cent of those aged 65+ were paupers solely because of old age.42 Another inflator of the statistics was said to be the tendency of applicants for outdoor relief to over-state their age, so that they could claim relief more easily. Relieving officers in non-COS Unions found it difficult to disprove such claims (since birth registration in Britain was still incomplete), or were sentimentally disinclined to do so.43 Finally, there was a tendency in the gathering of all official statistics (as in the census) to 'round up' to 60 the ages of applicants in their late fifties.44 In almost every aspect of their empirical battle against old age pensions, COS leaders were determined to overturn the growing liberal orthodoxies. Hence where pension campaigners argued that a 'twelvemonth' count of aged pauperism was much better than a 'one-day count', in that the former cast a wider net over the real extent of the problem (and revealed a higher rate of old age pauperism), the COS maintained that a 'one-day' count was better. A 'twelve-month count' inflated the statistics by 'double-counting' aged paupers who had migrated from one Union to another (a particular problem in London). 45 Thus if one disaggregated the old age pauperism statistics, removing 41 42 43 45

'Notes of the Month', Charity Organisation Review, vol. 8, no. 85, Jan. 1892, p. 17. Loch, 'Pauperism and Old-Age Pensions', pp. 1 5 3 - 5 . 44 Loch, 'Mr Charles Booth', p. 470. Loch, 'Statistics of Population', p. 292. Loch, 'Mr Charles Booth', pp. 4 7 0 - 1 .

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all the factors that artificially inflated them, then the level of old age pauperism became surprisingly low. The size of the 'problem' that remained was infinitely less than liberals claimed it to be, argued the COS. Of the 268,397 persons aged 65 or over in England and Wales on Poor Law relief on 1 January 1892, only 63,352 (or one-quarter) were on indoor relief. Excluding the aged paupers in workhouse infirmaries, one was left with only some 42,000 true 'aged paupers', or a mere 3.1 per cent of the total population aged 65 or over. The scale of the problem was actually very small - and certainly not sufficient to justify an expensive and socially dangerous system of tax-funded universal pensions.46 Throughout the 1890s, the 'old guard' COS leadership suggested a two-part alternative to universal state pensions. First, the screw should inexorably be tightened on all outdoor relief to the aged until it disappeared completely. 'Undeserving' aged paupers should only be relieved in the workhouse. They argued that, in the case of the aged, there had been so many improvements in workhouse regimes that the workhouse had become 'an almshouse and not a task house', as Thomas Mackay put it. Humane treatment of the aged should continue, they argued. There were excellent examples of what could be tried, such as the 'Brabazon system': educative programmes were set up, involving COS visitors, under which the workhouse-bound aged were encouraged to keep up old domestic skills (such as sewing and knitting) and learn new ones. All of this kept at bay the feared mentality of dependent 'pauperisation'.47 The vacuum left by the abolition of outdoor relief would be filled by the COS's own private old age pension scheme, which would be confined to the 'deserving' aged. In 1877 the COS set up its 'Tower Hamlets Pensions Committee', with Albert Pell as Chairman, and a membership including Canon Barnett, A. G. Crowder, Russell Barrington, Charles Fremantle and J. R. Hollond. Its aim was 'To provide pensions so far as its funds permit, for those poor persons who seem by their character and circumstances to be worthy of assistance outside the workhouse.' By 1881, only 119 pensions had been granted. In the 1880s, the scheme was extended to three more East End of London Unions - St George's, Whitechapel and Stepney - and other District Committees followed suit. Expenditure steadily increased; but still by 1896 only 1,194 pensions were being paid, at a total cost of £13,683. Of these, the vast majority (961) went to women, and only 233 to 46

47

Loch, Tauperism and Old-Age Pensions', pp. 1 5 3 - 5 ; E. W. Cripps, 'Old Age Pensions', Poor Law Conferences Held in the Year 1899-1900, p. 10. Mackay, Methods, pp. 5 8 , 8 2 - 3 .

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men. According to Thomas Mackay, the average amount paid in such pensions in the early 1890s was 3s 6d per week, on top of a rent payment.49 Not surprisingly, the main reason why this private pension scheme expanded so slowly was the stringent criterion of 'deservingness' applied. The COS had no qualms about peering into the obscurity of a past life and deciding moral worth. In addition, it is clear that its pension scheme functioned more as a remoralisation process than as a relief of old age poverty. Recipients were chosen so that they could be moral exemplars to the less fortunate: they were to be 'the "cream" of the old working people in the district', and the whole scheme would only encourage 'the true interests of the class it is intended to benefit' (that is, the working class in general) if the strictest of standards were applied to applicants.50 Pensions were only granted after rigorous investigation, including interviewing neighbours and ascertaining how much help from younger relatives was available. If able to pass the test of 'deservingness', there was still another hurdle to leap. Despite the munificent wealth of its supporters (and the large salaries it paid its senior officials), the COS insisted upon raising money from fresh donations for such cases. Help should be immediate, in order to strengthen the 'human' contact. 'Deserving' cases were enticingly advertised in The Charity Organisation Review, like some kind of public confessional, and only if donors were found would the recipient receive a pension. (Significantly, the donation had to be paid to the Society's Council, who would then pass it on to the relevant District Committee - another indication of the autocratic style of the Council.) The pension would be taken to the recipient's home each week by a COS visitor, thus maintaining the human contact and moral surveillance. A few examples will suffice to show how strict were the criteria of 'deservingness', based upon evidence of filial support, saving, blameless misfortune, and so on: The Shoreditch Committee ask for £4 7s 6d, to enable them to continue an allowance to a widow aged 74. She supported herself for 44 years, first by keeping a school, and then by book-sewing, but has been for some time too infirm to work. Relations who used to help are now unable to do so, owing to the failure of a bank. The Stepney Committee ask for £5 4s, to supplement a pension granted to two old maiden sisters, aged respectively 83 and 85. They were formerly school48

49 50

Bosanquet, Social Work, pp. 2 8 2 - 8 ; Charity Organisation Society Annual Report for 1897, p. 4 6 . Royal Commission on the Aged Poor, 1895, C 7 6 8 4 - 1 , vol. II, Minutes of Evidence, p. 5 0 1 . Statement by Marylebone District Committee, quoted in Mowat, Charity Organisation Society, p. 98.

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teachers, and saved £400, but lost it by the failure of a bank. They again started saving, and put by another £130. This is now exhausted, and age prevents them earning more than a nominal sum. The Poplar Committee ask for £ 3 18s to complete for six months an allowance of 10s 6d a week to a very nice old labourer and his wife. Nearly half the money needed is contributed by their children. The old man has been in two benefit clubs. He is becoming very infirm, but his wife nurses him with great care. He is 77 and she is 72 years old. The Stepney Committee ask for £4 11s, to provide an allowance of 3s 6d a week for a most respectable couple, both aged 70 years. The man has cataract in both eyes. He is now past work. His wife is only able to do a little housework; both were in domestic service. A sister-in-law gives rooms and a little food. The Fulham Committee ask for £ 3 18s, to complete an allowance of 4s 6d per week for six months to a respectable single woman, aged 88. She has now no relations left who can help, but a friend gives Is 6d per week. She was a nurse, and managed to save £42, long since exhausted. A niece, who is now dead, supported her for some time. The Poplar Committee ask for £7 16s, to complete an allowance of 10s a week for six months to an old shipwright and his wife. Two sons and a married daughter contribute the balance. At various times the old man put by out of his wages as much as £81 in the P. O. Savings Bank, but the money is now all gone. 51

The crisis over pensions In the 1870s and 1880s, the COS was at the zenith of its influence. Although it never succeeded in its aim of capturing the entire Poor Law system, and imposing its control over the disbursement of all relief, it enjoyed a dominant role in the social debates of those two decades. However, in the late 1880s a series of political and economic crises in London (such as 'Bloody Sunday' of 13 November 1887) was pushing a more politically far-sighted section of middle-class opinion away from the stern, unbending tenets of economic individualism and towards more collectivism 'liberal' remedies. Most of these 'reluctant collectivists' (such as Charles Booth, Professor Alfred Marshall and Canon Barnett) had much in common with the COS leaders - especially regarding the need to restore the Poor Law to its 1834 virtues. Where they differed, however, was in their view that limited extensions of state power were needed in order to attack specific problems endemic in late Victorian capitalism and to preserve the body politic from the ravages of the new socialist challenge, particularly in the aftermath of the widening of the parliamentary and local government franchise. As has been stressed in the introductory chapter, state old age 51

Charity Organisation Review, vol. 10, no. 109, Feb. 1894, pp. 109-11.

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pensions were proposed as one such limited intervention. They would lift a large client group off the Poor Law, and thus enable it to concentrate more effectively on its task of disciplining the able-bodied male and identifying more clearly the 'residuum' of casual labourers so that harsh remedial measures (such as labour colonies) could be implemented. An urgent problem faced by the middle-class reformers was the democratisation of the Poor Law. The 1884 Reform Act had extended the parliamentary franchise, and the 1885 Medical Relief (Disqualification Removal) Act had ended the disenfranchisement of those only in receipt of Poor Law medical relief. By the early 1890s, there was developing strong political pressure to enlarge the local government franchise, and open up the election of Boards of Guardians (which was achieved by the 1894 Local Government Act). The prospect of those who received public relief being able to elect the dispensers of that relief caused much heart-searching among middle-class reformers. If there were henceforth included on the outdoor relief rolls all those categories that aroused public sympathy (such as the aged or widows with children) then a liberalised Poor Law might grant outdoor relief as an automatic right. On the other hand, a reformed Poor Law, dealing only with the able-bodied, would be much more difficult to liberalise. By lifting the largest client group off outdoor relief, the socialist challenge could be pre-empted. However, COS leaders revealed their political backwardness by opposing any such limited 'collectivism interventions. What Stedman Jones has called 'the remoteness and anachronistic flavour of the positions adopted by the Society in the 1880s'52 alienated many of the more politically far-sighted of its supporters. We cannot understand the desperation of the COS's rearguard fight against old age pensions in the 1890s unless we appreciate that it was conducted against two distinct groups: first, the ideological renegades like Booth, who shared many of the COS's presuppositions (and were thus attacked in a particularly vituperative and sarcastic manner); second, the socialists of the 1890s who advocated the sweeping away from power of that very class that the COS represented. Broadly speaking, three possible remedies were on the middle class reform agenda in the 1890s. The first was the liberal orthodoxy: to lift off the Poor Law all those whose labour market value was marginal (the traditional 'impotent poor' of the old Poor Law - widows with children, the aged, children, the chronic sick and disabled), replacing outdoor 52

Stedman Jones, Outcast London, p. 300.

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relief by alternative income maintenance policies such as old age pensions, workmen's compensation, widows' pensions, cottage homes for orphans and a public medical service outside the Poor Law. Outdoor relief could then be virtually abolished (the workhouse being the only alternative), and a pre-emptive strike would have been made against those socialists who wished to render outdoor relief freely available to all as part of capitalism's bill for its own social casualties. Previous crusades against outdoor relief in individual Unions had depended upon heroic and somewhat isolated reformers. This was too vulnerable a basis for permanent reform: what was now desperately needed was a major structural change in the Poor Law that would render it impervious to socialist tampering. As a 'liberal' member of the COS council (the Revd Brooke Lambert) argued at a council debate on old age pensions in 1892: They could not shut their eyes to the fact that a new element had come into the discussion of these questions, and that the advance of democracy to power had created a new factor. They were bound to look forward to all manner of proposals for reform of the Poor Law, and it was wise that they should be beforehand with some practical scheme which would prevent rash revolutionary lapses.53 A second possible remedy suggested in the 1890s (by those of a more conservative disposition) was to remove the Poor Law from democratic control. This was an option favoured by some COS leaders: civil servants (presumably of an expanded Local Government Board) would take over the running of the entire system.54 To this end, the COS lobbied hard to have the Poor Law specifically excluded from the 1894 Local Government Act, pending the appointment of a Royal Commission on the Poor Law (which they hoped to pack); but they failed.55 The proposal is of historical interest, however, since it was to be applied in other aspects of income maintenance policies provided by the state in the twentieth century. The third remedy was that advocated by the COS die-hards: to brave the situation out, to resist all changes, to spread the gospel of the COS, and to work continually for the reduction of outdoor relief until its virtual abolition. To those, such as Joseph Chamberlain, who opposed such stubbornness on the grounds that it was politically very dangerous, Thomas Mackay boldly declared that social revolution would best be staved off by a 'cautious and continuous restriction of the facilities for 53

54 55

'Note of Special Meeting of the Council on 21 March 1892', Charity Review, vol. 8, no. 8 8 , April 1 8 9 2 , p. 153. See, for example, Mackay, Methods, pp. 3 9 - 4 0 . Bosanquet, Social Work in London, p. 2 7 3 .

Organisation

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obtaining Poor Law relief; this course of action would 'force the poor not into revolution, but into the orderly acquisition of property by means of the tenures already recognised by civilised society'. Likewise, C. S. Loch pointed out to Chamberlain that the virtual abolition of outdoor relief in Whitechapel had not caused social revolution. Mackay's hope was that, in the 1890s, there would be formed a 'natural alliance' between those two bulwarks of social conservatism - the COS and the friendly societies - in order to fight off the pensions challenge and achieve the 'dispauperisation' of the entire working class. 56 Essentially, it was a disagreement over the tactics required to defeat the perceived socialist threat. To those liberals who supported the first remedy, this die-hard COS position was too dangerous. The inflexibility and political backwardness of the COS 'old guard' caused much sorrow on the part of erstwhile supporters. For example, in the 1890s The Hospital magazine warned that: 'Mr. Loch has done good service in the past; but if he continues his present attitude, the influence of the COS must suffer considerably.'57 Accordingly, by the 1890s, key figures had partially dislodged themselves from the COS, and were now suggesting forms of 'limited socialism' or 'partial collectivism'. As we have seen, Charles Booth and Joseph Chamberlain were impelled to take up the cause of pensions for these reasons. A third interesting figure worth examining is Canon Samuel Barnett. Canon Barnett had originally been a COS enthusiast. Born in 1844, of a wealthy business background, Barnett took up his position as vicar of St Jude's in Whitechapel in 1873, and began the many enterprises aimed at moral and community regeneration for which he was to become deservedly famous (notably his involvement with Toynbee Hall, the university settlement). Barnett was active in many COS enterprises: for example, he helped found the Tower Hamlets Pensions Committee in 1877, and served a lengthy spell as a COS Poor Law Guardian in Whitechapel.58 As his wife recorded, 'During all the thirty years that Mr. Barnett served as a Guardian he never vacillated as to the wisdom of abolishing out-relief . . . and often referred with satisfaction to the figures of reduced pauperism, saved rates, and the absence of applicants.'59 However, the political turmoils of the 1880s forced Barnett into a 56

57

58

59

Mackay, Methods, pp. 2 4 , 1 6 6 - 7 ; Letter from L o c h to Chamberlain, Charity Organisation Review, vol. 8, no. 8 6 , Feb. 1 8 9 2 , pp. 3 7 - 4 4 . Quoted in Henrietta Barnett, Canon Barnett, His Life, Work and Friends (2 vols., 1 9 1 8 ) , vol. II, p. 2 6 8 . Standish Meacham, Toynbee Hall and Social Reform 1880-1914. The Search for Community ( 1 9 8 7 ) , chs. 2 and 3 . Henrietta Barnett, Canon Barnett, p. 2 8 1 .

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realisation that a more ideologically accommodating position was needed in order to achieve the twin aims of defeating socialism and reorganising the labour market. He had come out in favour of old age pensions in his 1883 article on 'Practicable Socialism': he rejoiced in the fact that, in Whitechapel, outdoor relief had been virtually abolished; but limited state intervention was now required in order to provide some measure of help for the very low-paid, and answer the socialist question of why the state should not provide all that was needed. Among several suggestions made by Barnett was one for a pension system paying 8s Od to 10s Od per week 'to every citizen who had kept himself until the age of 60 without workhouse aid'.60 Like Joseph Chamberlain, Barnett viewed this proposal very much in the context of the problem of the able-bodied young male. Once state pensions were introduced, public opinion would be mollified: 'then the conscience of the community will permit of stern treatment being applied to the idle and dissipated.'61 For the residue of able-bodied that remained as clients of the Poor Law, Barnett suggested a division into 'the unfortunate' and 'the idle' by the offer of a work test. Those able-bodied who refused this work test would be 'sent to the house of correction, there to be kept at hard labour for such time as may seem good'. The aim of Poor Law policy (in which it was inherently failing, through having to deal with so many aged poor) should be to get hold of the loafer, to take him out from among the poor, and to confine him until he had learnt some habits of punctuality and of work. It is impossible to do this until charitable public opinion is satisfied that provision is made for every one who needs, that the old man who sweeps the crossing and shivers out his petition has an adequate pension. Once this was done, the public 'which now protects the loafer', would leave him isolated, 'and he, driven by his needs, will accept the correction which will make him industrious'.62 Faced with the socialist threat in the 1890s, Barnett became increasingly impatient with the COS's inability to move with the times. In 1888, the Society had opposed his plan for a training farm for the unemployed (part of the 'correction process'), and Barnett had accused COS leaders of 'refusing to do anything except clothe themselves in the dirty rags of their own righteousness'.63 But the really bitter break came 60

61 62

63

Samuel A. Barnett, 'Practicable Socialism', The Nineteenth Century, no. 74, April 1883, pp. 5 5 4 - 7 . Quoted in Treble, 'National Leadership', p. 4 1 , n. 92. Samuel and Henrietta Barnett, Practicable Socialism. Essays on Social Reform (1895

edn),pp. 261-9,274-5. Quoted in Mowat, Charity Organisation Society, p. 127.

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when Barnett read his paper, 'A Friendly Criticism of the COS' at the Society's Council meeting of 15 July 1895. The issue of old age pensions was a key reason for the snapping of Barnett's patience. He accused the Council of having a 'narrow' mentality, and of being 'unwilling to leave the ruts which it has made . . . It has a sort of panic at the suggestion of socialism, and in fear of its presence ruthlessly destroys some of its own good work.'64 Livid with rage, Loch virtually accused Barnett of political cowardice: Barnett's idea of progress, said Loch, was merely 'a series of reactions . . . having changed once or more than once [he] may yet change once again'.65 In their own ways, these were highly accurate comments on each side's position in the old age pensions debate. The COS campaign against old age pensions From 1891, the campaign for old age pensions quickened in tempo, with Booth and Chamberlain unveiling their schemes, such that state pensions became the social issue of the 1890s. Deeply worried by this, the COS leadership began a concerted counter-campaign. As Helen Bosanquet was later to observe, somewhat sorrowfully, 'perhaps no question has given rise to more controversy within the Society, or alienated more of its supporters'.66 The problem for the COS leaders was that - for all the reasons already explained - their political backwardness caused them to over-estimate the socialist threat. They thus viewed old age pensions as a portentous issue, upon which hung the entire future of civilised, capitalist society. C. S. Loch sternly warned that 'we have two paths before us': one - slow and difficult - would eventually lead to social independence, prosperity for all and a stable society; the other - the path of liberal political expediency - was dangerous, fatally expensive and would result in social dependence.67 The COS Council moved quickly. A special meeting was held on 21 March 1892 to discuss the question. Thomas Mackay read a paper putting the case against state pensions, but there was opposition from the Revd Brooke Lambert, who warned the Council that it would be very politically foolish to ignore the growing public support for pensions, and thus to open the way to the socialists. Lambert supported Booth's universal 5 s Od pensions and argued that those who did not really need them would not to claim them. Rather unwisely, Lambert asked his audience of neo-Malthusians how many of them would bother to claim: 64 65 66 67

Quoted in Henrietta Barnett, Canon Barnett, vol. II, p. 2 6 8 . Quoted in Mowat, Charity Organisation Society, p. 129. Bosanquet, Social Work,p. 2 9 6 . Loch, 'Pauperism and Old-Age Pensions', p. 165.

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'Cries of "all!" "all!" from the audience, the majority of whom held up their hands'. 68 Other members of the Council spoke, and opinion was divided. Nevertheless, the views of the cold guard' leadership held sway, and at its meeting of 5 December 1892 the Council formally declared its opposition to all proposed old age pension schemes that would be paid out of public funds.69 The COS leaders now turned their full guns on Charles Booth, whose universal, tax-funded scheme was seen as the most dangerous, because it was the most 'socialistic'. Initially - in the late 1880s - Booth and the COS had been in complete accord on most issues. For his poverty survey, Booth had specifically chosen as his investigators two individuals who had been rent collectors for Octavia Hill - Beatrice Potter (Webb) and Maurice Paul - and, in turn, Bernard Bosanquet had approved of the Booth survey at its outset.70 But now Booth was repeatedly attacked in the most bitter fashion. His fetishistic empiricism was held up to ridicule, the implication being that it was essentially the product of political cowardice. Wrote Thomas Mackay sarcastically: 'Mr. Charles Booth is evidently a born demographist, not easily to be restrained from the manipulation and decimal-pointing of all figures within his reach.' Booth was not the objective, impartial investigator he claimed to be, said Mackay: unlike the COS activists, he had no direct experience of Poor Law administration. Booth's 'shower bath of 5s pensions', as Mackay wittily put it, would be simultaneously wasteful and demoralising in the case of the vast majority of aged who, on the COS's calculations, did not need them; and yet 5s Od per week would not suffice in those 'deserving' cases of real hardship that the COS were prepared to relieve. Of Booth's growing fame, Mackay commented that he would 'decline to swell the uncritical chorus of adulation which has accompanied all his efforts'.71 Despite these coruscating criticisms from the COS 'old guard', Booth's pension scheme was attracting the support of a growing number of more liberal COS activists. The political and labour-market imperatives - already outlined - were one reason; another was the seductive power of Booth's empiricism, which seemed to absolve many aged from moral responsibility for their poverty. A third interesting reason was that tax-funded universal pensions could be seen as enhancing thrift, by giving an individual an inducement to save for old age. Thus although Mary Calverly (writing in the Charity Organisation Review) dismissed Joseph Chamberlain's contributory pension proposals as a 'bribe to 68 69 70 71

'Note of Special Meeting', p. 153. 'Notes of the M o n t h ' , Charily Organisation Review, vol. 9, no. 96, Jan. 1893, p. 18. Stedman Jones, Outcast London, p. 306; MacBriar, An Edwardian Mixed Doubles, p. 66. Mackay, Methods, p. 258.

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thrift' that would not improve character, she was prepared to consider the merits of the Booth scheme, despite its high cost, since it was so difficult for the average working man to save for old age. Calverly felt uncomfortable at the tendency of the COS leaders to dismiss Booth's pensions as 'universal pauperisation'; the wealthier classes enjoyed inheritance and unearned income, and 'we never think of calling them paupers, but persons of independent fortune'.72 Unease over such class-based double standards increased in the 1890s, as supporters of universal pensions (particularly socialists) accused the COS of rank hypocrisy in asserting that they would fatally demoralise the working class, whereas recipients of occupational pensions were not affected. Thus in the sessions of oral evidence before the 1893-5 Aberdare Commission on the Aged Poor, Henry Broadhurst cleverly trapped Octavia Hill into first declaring that she was against 'all systems of pensions . . . in any form', but then blithely stating that pensions 'to higher class people' were 'utterly different'.73 Such blatant inconsistency angered opponents of the COS. It was 'claptrap', said the Revd Charles Cox, to fear the erosion of working-class independence: 'Did ministers and civil servants behave badly because they were assured of a pension in their old age?' asked Cox, pointing out that several members of the Aberdare Commission would themselves receive handsome pensions in retirement.74 Charles Cox was typical of those who attacked the COS with increasing ferocity in the 1890s. In 1894 - the first election of Guardians under the new democratised franchise - Cox had become a Poor Law Guardian in Brixworth (previously dominated by the COS, and held up as one of their model Unions). In a long address to a local Poor Law conference in 1898 (events which were held throughout the country each year, and which had been uncritical forums for COS ideology), Cox launched a devastating attack on the COS claims regarding their long rule in Brixworth (now ended). He began by noting that this was the first time that 'an avowed and determined advocate of outdoor relief such as himself had been permitted to address these Poor Law conferences: in effect, he accused the COS of conspiring to prevent such views being heard. Yet, argued Cox, the COS's views were those of a small minority - as was shown by their lack of success in capturing Boards of Guardians. Even where they had gained control in the past, 72

Mary Calverly, 'Thrift and Old Age Pensions', Charity Organisation Review, vol. 9, no.

73

Royal Commission on the Aged Poor, 1895, C 7684-11, vol. Ill, Minutes of Evidence, p. 558. Poor Law Conferences Held in the Year 1899-1900, p. 78; Revd J. Charles Cox, 'Old Age Pensions', Poor Law Conferences Held in the Year 1898-9 (1899), pp. 636-8.

96, Jan. 1893, pp. 2-4. 74

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this had been done by electoral chicanery - revealing their fundamental dislike of democracy. Since the 'free elections' of 1894, many of these had passed out of COS control. One such was Brixworth. Between 1871 and 1894 the number of indoor paupers there had been cut from 108 to 96, and the number of outdoor paupers from 1,118 to only 17. Yet wages had not risen, as the tenets of classical economics predicted they would: in fact, average agricultural wages had fallen, from 14s Od to 13s Od per week. Nor had friendly society membership risen. Hardship among the poor seemed to have increased. Thus the COS had failed in their legal obligations as Guardians of the Poor. Most devastating of all was Cox's charge that, in order to implement the supposed 'economical' regime of minimal outdoor relief, the COS had spent so much on officials' salaries and other administrative expenses that overall costs in all their model Poor Law Unions had greatly increased. In Whitechapel, for example, the cost of outdoor relief had fallen from £6,864 to £555 between 1870 and 1898; but over the same period total expenditure had risen from £31,771 to £48,232. These real financial figures were never mentioned in COS propaganda. Nor did the COS point out that, where outdoor relief was virtually abolished, paupers simply migrated to neighbouring Unions. In conclusion, Cox charged the COS with being ca wholly irresponsible body. . . the way it now finances the large charitable funds entrusted to its care is little short of a scandal'.75 In short, his list of accusations made the COS out to be inhumane, self-seeking, hypocritical and deceitful. The smouldering discontent of the more liberal rank-and-file COS members came to a head in mid-1894. Inspired by Canon Barnett, several COS District Committees sent letters of protest to the Council, expressing resentment over both its autocratic style, and its readiness to level charges of 'disloyalty' against those members who did not show total obedience to the views of the majority of the Council. It is clear that old age pensions were the key issue: many rank-and-file members were dismayed at the Council's decision of 5 December 1892 to oppose all proposed state schemes.76 Gradually losing their grip on the situation, the 'old guard' COS leaders were unable to influence the policy-making process in the way that they had hoped. An official enquiry into the Poor Law did not come until 1905-9, and by then it was too late. They did manage to make the 75

76

Revd J. Charles Cox, 'Outdoor Relief: With Special Reference to Brixworth, Atcham, and Whitechapel', Poor Law Conferences Held in the Year 1899-1900, pp. 1 9 3 - 2 1 5 . For the debates o n this issue, see Charity Organisation Review, vol. 10, no. 113, June

1894, pp. 278-99.

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1893-5 Aberdare Commission a showcase for their ideas: Loch and Pell served on it, and Vallance, Mackay and Hill gave oral evidence. But the 1896-8 Rothschild Committee and 1899 Chaplin Committee paid much less attention to COS views. The Society established a 'Committee on Old Age Pensions' in 1900, and published a collection of papers on the subject three years later;77 but the Committee observed events, and could not influence them. By the early 1900s the Charity Organisation Society had become marginal to the old age pensions debate. Thus although its leaders continued to issue dire warnings of what would follow in its wake, the Society was powerless to prevent the 1908 Old Age Pensions Bill becoming law. Helen Bosanquet had always made interesting and perceptive criticisms of the old age pensions campaign, suspecting that it was a middleclass movement of political expediency not primarily concerned with the real needs of impoverished old people. For example, she very much doubted whether the varying needs of the aged poor - as human beings - would be adequately met by a 'small monetary allowance' of 5s Od per week. Based upon her experience of the Society's own pension scheme, she regarded the sums of 5s Od (single) and 8s Od (couple) plus rent to be the very minimum needed. Besides, there was more to life than money; old people were far more likely to suffer from loneliness than from lack of food or clothing - 'secluded almost entirely from the world, friendless and childless, their days wear away in dull monotony' - and when infirmity came upon them, it was most often the lack of help from younger relatives that forced them to take refuge in the workhouse. A universal pension would hardly alter this situation, she pointed out. 78 Writing in 1910, C. S. Loch also grudgingly conceded that there must be instances where the new state pension was reaching those in real destitution, but a better way would have been to target the really needy.79 Looking back from 1914, Helen Bosanquet regretted the abandonment of the pauper disqualification for receipt of the state old age pension, since it had blurred the distinction between the 'pauper class' and the 'pension class', and she attributed the rise in aged pauperism from the mid-1890s to both the pernicious effects of democracy (causing irresponsible, vote-catching Guardians to be elected) and the old age pensions campaign, which had fatally raised the expectations of 77

78

Charity Organisation Society Committee on Old Age Pensions, Old Age Pensions; A Collection of Short Papers (1903). 79 Bosanquet, The Strength, p. 197. Loch, Charity and Social Life, pp. 4 6 0 - 1 .

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old people. 80 But there was a tone of relief in her acceptance of the collectivist fait accompli of the 1908 Act. The introduction of taxfunded, means-tested old age pensions had not ushered in the socialist millennium. In one respect, though, the prophecies of the COS were to prove partially correct. They had always argued that the introduction of state pensions would lead to a fall in wages, in that pensioned older workers would be able to compete more favourably in the labour market with younger workers.81 Believing in an infinitely expandable labour market (what would now be called a 'supply-side' viewpoint), the COS failed to appreciate that jobs for older workers were drying up and that therefore decreasing numbers of them would be serious industrial competitors with the young. But after 1908, and especially after 1925, employers did increasingly cut the wages of their older, pensioned employees by exactly the amount of the pension. This was to give the politics of retirement a new twist. 80 81

B o s a n q u e t , The Strength, p p . 2 4 4 - 5 . See, for example, L o c h , Charity and Social Life, p . 3 5 7 .

The attitude of the friendly societies

The friendly societies: origins and growth Apart from the Charity Organisation Society, the other principal force opposing state old age pensions until the very end of the 1890s was the working-class friendly societies. This chapter will explore the reasons for their qualified opposition, and why they eventually came round to supporting state intervention. The very long-term origins of friendly societies are almost 'lost in antiquity', as two commentators have put it.1 We know that guilds and craft organisations providing mutual assurance existed in Roman times; and in the reign of Edward III there was founded the St Catherine's Guild of Coventry. This latter included the provision for a member that 'if sick, or infirm through old age, he is to be supported by his Guild according to his condition'. Moral judgements as to the applicant's character were exercised: £no one notorious for felony, homicide, lechery, gaming, sorcery, or heresy' was to be admitted.2 In his study of the subject, Voluntary Action (1948), Lord Beveridge found several preindustrial examples, such as the Incorporation of Carters (founded in Leith in 1555), and in the medieval and early modern periods friendly societies were associated with craft guilds. A leading historian of the societies has estimated that, by the end of the eighteenth century, there must have been several thousand local small 'box clubs' and primitive friendly societies in Britain.3 Many contingencies could be covered by a simple insurance contract between members, such as sickness, old age, loss of sight, loss of a limb, fire, flood, shipwreck, robbery, maintenance of members who travelled in search of employment (the 'tramping artisan'), fire 1 2

3

C. H. L. Brown and J. A. G. Taylor, Friendly Societies (1933), p. 1. Quoted in Richardson Campbell, Provident and Industrial Institutions (n.d., c.1925), p. 21. Lord Beveridge, Voluntary Action. A Report on the Methods of Social Advance (1948), p. 22; P. H. J. H. Gosden, Self-Help. Voluntary Associations in the 19th Century (1973), p. 9.

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damage, or the loss of tools of a trade. However, most societies only provided two kinds of benefit: first, for sickness or infirmity (whether physical or mental); second, for the expense of a funeral (via 'death benefit'). Amounts paid in sickness benefit varied, but - to give one example - in the 1880s the Ancient Order of Foresters normally paid sickness benefit of 10s Od per week for the first twelve months of sickness, half-pay of 5s Od per week for the next twelve months, and 2s 6d per week thereafter 'for the remainder of sickness'.4 The financial basis of the friendly societies varied greatly. The largest pretended to operate true actuarial policies, in which lifetime contributions accrued interest, but in practice they fell into the temptation of funding more on a 'pay-as-you-go' basis: as we shall see, this meant that they deliberately ran deficits. Many small societies were based upon the 'dividing out' or 'box club' principle, whereby any surplus of contribution income over benefit expenditure was divided among subscribers at the end of each financial year. Members of friendly societies tended to display the sectional consciousness of the labour aristocrats who distanced themselves from unskilled manual labourers. Like most nineteenth-century skilled working-class institutions, the friendly societies had an inward-looking, secretive mentality: social and ritualistic functions were often as important as welfare cover. These rituals were impenetrable, and - somewhat to the impatience of outsiders - the societies' financial workings were often shrouded in mystery. In short, friendly societies represented a 'state within a state', offering alternative institutions, support systems and training in the arts of government in a society where the conventional state institutions - notably parliament, local government and the Poor Law - were closed off the the working class. But it would be quite wrong to see them as paragons of private welfare, entirely independent of the state. For in fact throughout their history they were closely monitored and controlled by the state. In 1793 there was passed Rose's Act ('for the encouragement and relief of Friendly Societies'), which required them to be registered if they wished to enjoy the status of recognised bodies. As Peter Gosden has pointed out, between 1793 and 1875 parliament passed no less than nineteen Acts aimed at friendly society regulation, and five parliamentary committees (plus the 1871-4 Royal Commission) investigated their activities. At key moments of political unrest - such as 1830-2 and the late 1860s - the friendly societies came under intense state scrutiny, and 4

Figures from Revd John Frome Wilkinson, The Friendly Society Movement (1891 edn), p. 227.

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fears were repeatedly expressed over what might happen if they became politicised.5 Thus in the eighty years after Rose's Act the friendly societies lived an uneasy existence. Like the craft unions, they occupied a twilight world of semi-illegality. (The frequency with which the word 'loyal' appeared in their titles was a tribute to this, as was the fact that overt political discussion in their meetings was often prohibited.) The smaller societies faced recurring financial difficulties: there was inadequate legal protection for members if a treasurer embezzled funds (such a fate befell the large Manchester Unity in 1848); competition between societies caused them to undercut each other dangerously; organisation could be amateurish; incompetence, instability and fraud were not uncommon - for example, a sick club might go bankrupt after members had paid in for many years.6 In 1867, the Registrar of Friendly Societies estimated that, since 1793, 13,935 out of the total of 38,315 societies formed (or 36 per cent) had collapsed.7 In short, the societies were inherently weak; and with a politically docile labour aristocracy as members, the state had little need to exercise overt control. Significantly, major new intervention came in the early 1870s, after a brief period of trade union growth and radical political activity. A Royal Commission on Friendly Societies sat between 1871 and 1874: it investigated their organisational structure and financial problems, producing four reports. It estimated the total membership of all societies to be around 4,000,000 - a significant growth from the estimated membership of 648,000 made by Sir Frederick Eden in 1801 - and it noted that roughly half of all societies were still unregistered. The 1875 Friendly Societies Act, which followed the Royal Commission, offered further financial inducements to registration. Registered societies were granted a range of legal and financial advantages; but they had to conform to even stricter rules as a condition of being registered. Most notably, they had to submit quinquennial returns of sickness and mortality, upon which basis there would take place a valuation of assets against liabilities; but in return they were given greater financial advantages, such as legally being able to hold land and property in the name of their trustees, and taking out legal proceedings.8 Quinquennial valuation enhanced the role of consultant actuaries, who imposed upon societies control from 5 6 7

8

P. H. J. H. Gosden, The Friendly Societies in England 1815-1875 (1961), pp. 155-73. Ibid., pp. 9 4 - 5 . Humphrey Southall and Eilidh Garrett, 'Morbidity and Mortality Among Early Nineteenth Century Engineering Workers', Social History of Medicine, vol. 4, no. 2, Aug. 1991, p. 240. Wilkinson, Friendly Society Movement, pp. 223-5.

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outside via the arcane and mysterious science of life-tables. Another Friendly Societies Act in 1896 tightened control even further. The problems of the societies It is difficult to generalise about the friendly societies in the nineteenth century, since they operated on so many different levels. At the top were those two great institutions, the Manchester Unity of Oddfellows and the Ancient Order of Foresters; at the bottom, the term 'friendly society' covered a multitude of dividing societies, sick clubs, collecting societies, tontines, village clubs, and so on. Thus estimates of friendly society membership are problematic. In the early 1890s, the combined membership of the Manchester Unity and the Foresters totalled 1,600,223; but adding in the branches of affiliated orders brought this up to 1,727,809. In addition, membership of other registered friendly societies totalled 2,133,710. According to Sir Edward Brabrook, Chief Registrar of Friendly Societies, there were another 3,318,942 members of'collecting societies'.9 On the most generous estimate, fully 8,078,816 individuals in the United Kingdom were friendly society members (in 24,041 separate societies) in the late 1890s.10 However, many estimates excluded the collecting societies: to the friendly society purist, these societies (with their scandalously high expense ratios and rate of lapsed policies) were too ruthlessly commercial to fit comfortably with the ideals of fraternity, mutuality and risk-pooling. Thus the Rothschild Report of 1898 put the membership of registered societies at 4,203,601, plus another 1,106,507 members in unregistered societies.11 The tendency to lapses of membership was more pronounced in the smaller societies, making crosssectional counting less than accurate: even in the well-run Manchester Unity, one-eighth of members lapsed in afive-yearperiod in the 1890s.12 Thus if we accept these lower estimates as more reliable, we can conclude that, by the end of the nineteenth century, just under half of all adult males in the UK were members offriendlysocieties. Whatever these differences in counting, it is clear that the friendly societies were growing in membership in the fifty years before the First World War. Registered friendly society membership alone doubled between the late 1870s and the early 1900s.13 This has led historians of 9

10 11 12

13

Report of the Royal Commission on the Aged Poor, 1895, C-7684-II, vol. Ill, Minutes of Evidence, pp. 591-2. E. W. Brabrook, Provident Societies and Industrial Welfare (1898), p. 56. Report of the Committee on Old Age Pensions, C.8911, 1898, p. 6. Alfred W. Watson, An Account of an Investigation of the Sickness and Mortality Experience of the I. O. O.F. Manchester Unity During the Five Years 1893-1897 (1903), p. 11. Gosden, Self-Help, p. 91.

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both the left and the right to indulge in some counterfactual thinking regarding state intervention. To the left, the growth of friendly society membership constituted a potential danger to the capitalist state, especially with the politicisation of the craft unions in the early 1900s and the increasing tendency of trade unions to use their friendly society benefits to finance strikes. On this scenario, they could have become alternative working-class welfare institutions, able to resist control by the state. Indeed, the 'Liberal welfare reforms' of 1906-11 can even be seen as a method of breaking their power.14 To the 'new Right', the friendly societies offer a tantalising prospect of what private, self-help welfare might have been had not the paternalistic state intervened and created a 'dependency culture'.15 However, over-romanticised views of the friendly societies tend to overlook several harsh realities. First, their membership was confined to the most skilled and prosperous of the working class - in other words, they failed to cover those who most desperately needed income support in times of lost earnings. Levels of premiums also correlated with the financial soundness of the society: the most skilled could pay the highest contributions, and thus enjoyed the most reliable protection. Second, there were very few women members (only 70,000, according to one estimate in 1902).16 Societies for women did exist - such as the Order of United Sisters, founded in 1884 by the Revd J. Frome Wilkinson - and could be found in areas with highly feminised workforces (for example, textile manufacturing). But women's low membership reflected their episodic labour force participation, the actuarial complications induced by maternity, and the fact that women's overall sickness claims were higher up to the age of 60.17 Thus another group especially in need of welfare (particularly health insurance) was effectively excluded. Third, lapses in contributions were common. One estimate was that some 50 per cent of starting members eventually dropped out.18 Provision for old age per se was uncommon. Superannuation schemes attracted few takers. The Ancient Order of Foresters began one such in 1883, but ten years later it had only three subscribers out of the society's 830,720 members. The Manchester Unity's equivalent 14

15 16

17

18

For an interesting, nuanced exploration of this theme, see Stephen Yeo, Working Class Association, Private Capital, Welfare and the State in the late Nineteenth and Twentieth Centuries', in Noel Parry, Michael Rustin and Carol Satyamurti (eds.), Social Work, Welfare and the State (1979), pp. 4 8 - 7 1 . David Green, Reinventing Civil Society (1993). Statement by R. Waite, Report of the Old Age Pensions Conference Held in the Memorial Hall, 14 and 15 January, 1902 (1902), p. 16. Alfred Watson, Friendly Societies for Women, with Special Consideration of the Sickness Risk from the Actuarial Point of View (1897), pp. 1 - 4 . Evidence by Reuben Watson, Royal Commission on the Aged Poor, vol. Ill, p. 622.

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scheme had 500 members in the early 1890s (less than 1 per cent of its total membership).19 Trade unions did offer superannuation to their members, albeit under strict terms and as a small part of their overall benefit provision. As with nearly everything to do with friendly societies, there are frustratingly different estimates of the extent of such cover. One, by the Chief Registrar of Friendly Societies (Sir Edward Brabrook) claimed that in 1890 the total expenditure of 259 trade unions who operated as provident institutions (providing a range of benefits) was £862,000; of this sum, only £87,000 was spent on superannuation benefits.20 It is probable that this latter total was paid by only half of these trade unions, for another rather higher contemporary estimate was that some 120 trade unions paid superannuation benefit in 1895. Of these, twenty-six unions represented nine-tenths of members, paying out a total of £128,591 in that year to 7,254 beneficiaries - an average of about 7s Od per week each. This was dispensed on a discretionary basis, subject to stringent conditions. A recipient had to have been: a member for a certain number of years, over a certain age, and able to prove (for example, with a medical certificate) 'that he is not able to earn more than one-half the wages of his trade, or that he is not able to earn the correct wages of his trade by reason of old age or infirmity'.21 Apart from providing much-needed support for older members, the strict application of this last condition was designed to protect the trade union-negotiated rate for the job by removing possible competition by a reserve army of older members. True superannuation schemes were intrinsically problematic. In order to be financially sound, and guarantee to pay benefit at the age of 65, they had to charge high rates of contribution and accumulate large reserves.22 From the members' point of view, superannuation benefits were unattractive. Although the actuary to the Manchester Unity (Reuben Watson) pointed out that, statistically, new entrants had a good chance of surviving to old age - of every 100,000 who entered a friendly society at age 18, 48,343 could expect to survive to age 65, and 36,974 survive to 70 - nevertheless old age was seen as a too-distant contingency to be worth insuring against.23 19

20 21

22 23

James H. Treble, 'The Attitudes of Friendly Societies Towards the Movement in Great Britain for State Pensions, 1878-1908', International Review of Social History, vol. 15, pt. 2, 1970, p. 278. Brabrook, Provident Societies, p. 32. Evidence by John Burnett (Chief Labour Correspondent of the Board of Trade), Report of the Committee on Old Age Pensions, pp. 1 0 4 - 5 . Report of the Royal Commission on the Aged Poor, 1895, C-7684, vol. I, p. lviii. Ibid., vol. Ill, Minutes of Evidence, p. 613. This estimate takes no account of lapses in

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But there was another, more important, reason for the lack of true superannuation schemes. This was that friendly societies paid quasi-old age pensions anyway in the form of sickness benefit. The 1875 Friendly Societies Act defined old age as 'any age after 50', and although the Court of the Queen's Bench ruled that 'natural decay' was not 'sickness', most societies were very reluctant to follow this ruling.24 To deny sickness benefit to a needy older member went against their fraternal ethos; societies were very unwilling to see any of their members fall on to the Poor Law in old age; competition for new members meant that societies had to be seen to be generous in interpreting the terms of their insurance contracts with members; the societies' constitutions would not permit them to go against the wishes of their members, and these members wanted sickness benefit paid for old age infirmity; finally, anyone taking out a true annuity scheme could not have been denied sickness benefit as well in old age, and there was little point in such 'over-insurance'. 'Pay them . . . if they should live to the age of Methuselah', was the comment of the Oddfellows Magazine, arguing that this was the contractual right of older members. 25 The position was summed up graphically by the Revd J. Frome Wilkinson: When the period of loss of wages arising from the disability of old age and wornout working powers arrives, the society's doctor in many cases feels compelled to stretch a point and, rules notwithstanding, to judge cases brought to his notice by the heart rather than the head, lest the old folk become altogether destitute and fall on the poor-rate. The cause of humanity triumphs, but the outraged science of vital statistics avenges itself upon the society as a whole, and deficiency upon deficiency is quickly piled up. 26

A few societies separated sickness benefit from annuities. For example, the 'Rules and Regulations of the Castle Eden Friendly Society' offered male members aged 60+, and women aged 50+, either an annuity graduated by age or sickness benefit, but not both. 27 But such instances were rare. Mostly, societies were generous to their older members foolishly so, in the opinion of their actuaries. Few were quite as giving as the Hearts of Oak Society, which paid reduced sickness benefit to members aged over 60 who were still able to work a little (earning up to

24 25 26

27

contributions, which would have considerably reduced the number remaining as members in old age. Gosden, Self-Help, pp. 262, 266. Oddfellows Magazine, vol. 26, no. 244, April 1895, p. 104. J. Frome Wilkinson, 'Friendly Society Finance', Economic Journal, vol. 2, no. 8, Dec. 1892, pp. 7 2 5 - 6 . Rules and Regulations of the Castle Eden Friendly Society (n.d.), in Friendly Societies.

Seven Pamphlets, 1798-1839 (1972), pp. 28-31.

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12s Od per week),28 but all looked upon their older members as automatically deserving. Thus by the end of the nineteenth century, 'infirmity' had become synonymous with old age. As a representative of the Manchester Unity put it: 'A large amount of sick pay is given now to members who are not suffering from any specific disease, more in the form of a pension than anything else, and to that is attributed the insolvency existing to a large extent in the order.'29 The growing 'insolvency' of friendly societies requires careful consideration, for it has long been held as the major reason for their coming round to a position of support for state pensions in the 1890s and early 1900s. The question of 'insolvency' In an important and influential interpretation advanced in the 1960s, Professor Bentley Gilbert argued that changing patterns of morbidity and mortality over the course of the nineteenth century were creating serious financial problems for the societies. The older quick-killing diseases of the early industrial era (notably, epidemics) were being replaced by degenerative illnesses of longer duration (such as tuberculosis, cancer and heart disease). The actuarial gain to the societies derived from a longer period of contributions was more than wiped out by the extended period of benefit that now had to be paid out at the end of the life course. This demography-driven problem was exacerbated, maintained Gilbert, by the tendency of friendly societies to use out-of-date lifetables in setting their premiums and benefits. They 'almost invariably' used William Farr's English Life Table No. /, based upon mortality rates in the period 1836-54. Farr's table showed that, at age 20 (which we can take as the normal age of entry into a friendly society), a male could on average expect to live to 59.5 years of age. But by 1890-1900, the expected average age of death of males reaching maturity was 62.0 years, and by 1911 it was 64.2 years.30 Societies were developing a 'topheavy' age structure, but were not fully realising the fact. A further exacerbation arose from the fact that, as society membership grew at the end of the nineteenth century, so competition for new members increased; premiums were lowered below actuarially justified levels in 28

29 30

Alfred William Watson, Friendly Society Finance Considered in its Actuarial Aspect (1912), p. 13. Evidence by Tom Hughes, Report of the Committee on Old Age Pensions, p. 3 1 . Bentley B. Gilbert, ' T h e Decay of Nineteenth-Century Provident Institutions and the Coming of Old Age Pensions in Great Britain', Economic History Review, vol. 17, no. 3 , April 1965, p. 553.

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order to woo new members. Finally, argued Gilbert, the decline in the birth-rate from the late 1870s diminished the proportion of new, young entrants who otherwise would have swelled the societies' incomes.31 The result was that, of 14,988 friendly societies in England and Wales subject to a special valuation in 1891 by the Chief Registrar's Office, 11,866 showed a deficiency of funds, and only 3,122 showed a surplus. The total surplus was £1,781,319, and the total deficiency, £10,734,515.32 There were considerable variations in insolvency between societies. Thus in 1891 the Manchester Unity's solvency ratio was 19s Id in the pound; in the Ancient Order of Foresters it was 17s Id; and in the Free and Independent United Order of Mechanics it was only 10s 3d.33 A similar survey for the 1896-8 Rothschild Committee examined returns from thirty-four societies with 22,608 branches, covering 2,351,150 members (or one-half of total registered friendly society membership). Of those prepared to reveal their financial condition, 5,049 societies and branches showed a surplus, and 12,448 a deficiency.34 On the face of it, this was a very serious situation: it seemed that, where the societies' futures were concerned, they were in a 'really desperate actuarial position', and little could be done to prevent 'the bankruptcy toward which they were rushing', as Gilbert has put it. Faced with this impending actuarial cataclysm, so the argument goes, the societies came round to a support for old age pensions in the late 1890s and early 1900s, perceiving that a non-contributory state scheme would relieve them of the burden of supporting their older members. These demographic imperatives overcame the inherent social and political conservatism of the societies. And the necessity of placating them was 'an important determinant' of the form of both the 1908 state pensions scheme and the 1911 National Insurance Act.35 However, this thesis - very influential on subsequent historians - now requires considerable modification. Granted, if we accept the evidence of the consultant actuaries who advised the friendly societies, then Gilbert's explanation appears plausible, for by the end of the nineteenth century these actuaries were uttering Cassandra-like warnings about the societies' insolvency. They urged the societies to make sickness benefit cease at the age of 65 and to develop true deferred annuity schemes for their older members. Many witnesses to the Aberdare Commission of 1893-5 took this line. Reuben Watson (actuary to the Manchester 31 32 33 35

Bentley Gilbert, The Evolution of National Insurance in Great Britain ( 1 9 6 6 ) , p. 173. Wilkinson, ' F r i e n d l y Society F i n a n c e ' , p . 7 2 1 . 34 G o s d e n , Self-Help, p . 102. Gilbert, The Evolution, p. 170. Ibid., pp. 1 7 5 , 178, 160.

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Unity) was pressing this upon them as far back as 1878, and repeated the advice in his oral evidence to the Commission.36 Sir Edward Brabrook (Chief Registrar) also argued that this was the only way forward, but understood why it was so difficult for the societies: he believed that they were nervously waiting for each other to take the first step in this direction. In the slightly exasperated tone deployed by many middle-class social commentators when observing working-class culture, Brabrook tried to show how tantalisingly easy it would be: he argued that an annual contribution (from the age of 21) of 19s Od would fund sickness benefit of 10s Od per week for the first twenty-six weeks of sickness, and 5s Od thereafter; only an extra 10s Od per annum was needed to fund a fixed pension after the age of 65 of £13 19s per annum.37 Reuben Watson's calculation was that just under 2|d a week a little more than the cost of a glass of beer - would secure a 5s Od per week pension at age 65. 38 Yet society members stubbornly ignored such advice. Interestingly, though most of the consultant actuaries maintained an attitude of Olympian disdain towards the dividing societies, dismissively arguing that they were not based on true insurance principles (thus not requiring the services of actuaries), and that they adopted the morally dubious solution of dissolving themselves in order to get rid of risky members,39 the Chief Registrar did have some good words to say about them on this very point. Their simple funding mechanism meant that they could not be tempted into paying disguised superannuation: 'There is no affectation of providing for old age, either directly or indirectly', wrote Brabrook: 'If the members feel it their duty to provide for old age, they know they must go elsewhere to do so.'40 However, there are important reasons for not interpreting these apocalyptic warnings as necessarily an accurate reflection of friendly society finance. Actuarial advice had been forthcoming throughout the second half of the nineteenth century, dependent upon analyses of mortality and morbidity. These texts included: Charles Ansell, A Treatise on Friendly Societies (1835); Henry Ratcliffe, Observations on the Rate of Mortality and Sickness Existing Among Friendly Societies (1850); Francis G. P. Neison, Snr, Contributions to Vital Statistics: Being a Development of the Rate of Mortality and the Laws of Sickness (1845); Reuben Watson, Explanatory Treatise on the Valuation of Friendly Societies 36 37 38 39 40

Reuben Watson, Explanatory Treatise on the Valuation of Friendly Societies (1878), p. 38. Brabrook, Provident Societies, pp. 1 1 4 - 1 7 . Royal Commission on the Aged Poor, vol. Ill, p. 621. See, for example, Watson, Friendly Society Finance, p. 2 1 . Brabrook, Provident Societies, p. 70. Likewise, Beveridge observed that the dividing societies were 'the way to insurance without an actuary, a form of reading without tears whose attractions are undeniable'. Beveridge, Voluntary Action, p. 44.

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(1878); Francis G. P. Neison, Jnr, Observations on the Efficient Valuation of Friendly Societies (1885) and The Rates of Mortality and Sickness According to the Experience for the Ten Years 1878-1887 of the Independent Order of Rechabites (Salford Unity) Friendly Society (1889). Modern

analysis of these and other sources shows that they all revealed the fact that sickness benefit claims increased with the age of members.41 Prior to 1834, registered friendly societies had had to submit tables of contributions and benefits to local Justices of the Peace; but the 1834 Friendly Societies Act had repealed this, devolving responsibility on to the societies themselves. The larger and more responsible societies sought advice from consultant actuaries after 1834. By requiring registered societies to undergo quinquennial valuations, the 1875 Friendly Societies Act increased the role of the actuaries even further. (An interesting point to note is that the 1874 Final Report of the Royal Commission had mooted the possibility of the state providing 'model tables' for registered friendly societies to use; but no government had dared implement this, for fear of being held responsible if a society went bankrupt.) It is important to bear in mind, therefore, that as the role of the consultant actuaries increased, so did their advice become more peremptory, alarmist and possibly even self-serving. A little scepticism thus goes a long way, for several reasons. First, the issue of insolvency was not as serious as many commentators have made it out to be. 'Insolvency' was an actuarial construct, and could be calculated in different ways. Most commonly, it involved the comparison of assets (the monies, plus interest, that a society expected to receive in the future from existing members) against liabilities (what the society could expect to pay out in the future in benefits). A deficiency meant that, unless remedial steps were taken, immediate and nearfuture claims could be paid, but claims further into the future could not. This was quite different from a 'deficit' in commercial terms, where all existing claims cannot be met and bankruptcy ensues. Supporters of friendly societies were quick to point this out: the Revd J. Frome Wilkinson asserted that 'When a valuer, then, arrives at an arithmetical result, bringing out a surplus or a deficiency of the funds of a friendly society, he is not stating a fact; he is merely giving an estimate, which may become a fact.'42 The construction of such estimates was a highly technical process, involving a complex set of variables: for example, there were different ways of calculating assets in the form of land, 41

42

James C. Riley, 'Disease Without Death: New Sources for a History of Sickness', Journal of Interdisciplinary History, vol. 17, pt. 3 , Winter 1987, esp. pp. 5 5 5 - 9 . Wilkinson, The Friendly Society Movement, p. 88. In chapter 10, Wilkinson explained the technicalities of the valuation process.

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property or investments, or of predicting future interest rates; again, a deficiency would increase if a society withdrew funds for much-needed capital expenditure. Thus estimates of future solvency could easily be upset. Second, most of the concern over insolvency in the 1890s came from middle-class outsiders, such as the actuarial advisers and interested politicians, and not from within the societies. Actuaries like Alfred Watson tended to adopt a slightly patronising, 'holier than thou' attitude - albeit from a position of some affection - towards the societies' financial affairs. 'This is the moral every actuary is preaching', was a typical comment of the time (in this case, a comment by Brabrook on the need to separate sickness and superannuation benefits).43 Socialists were a little suspicious of this middle-class interference: 'we find some patronage, and much help that is not patronage, from the upper and middle classes in the friendly society movement', wrote Frederick Rogers caustically in 1903.44 There had been a long history of mild mutual misunderstanding between the two sides (for example, during the oral evidence hearings of the 1867-9 Royal Commission on Trade Unions). Frome Wilkinson took a delight in pointing out that in 1845 the eminent actuary Francis G. P. Neison, Snr had predicted the imminent collapse of the Manchester Unity, on the basis of its sickness and mortality returns: Wilkinson gently chided those 'who look upon members of the Institute of Actuaries as being next door to infallibility'.45 In short, the desiccated science of life-tables did not fit in easily with the friendly society ideals of conviviality and fraternity. One can also detect some class distancing in the actuaries' implicit attitude that even the labour aristocracy were incapable of managing their own financial affairs. Such moral rectitude was their duty: but it also rendered their evidence over-alarmist and not wholly reliable. Bentley Gilbert likewise tended to adopt this view, maintaining that 'even the best managed' societies 'did not understand precisely the reason for their actuarial deficiencies'; nor could they explain things to their members ('hard-handed men for whom statistics were a mystery').46 Far from being outwith their control, as Gilbert implied,47 these deficiencies could be remedied, and were being remedied. They arose 43 44

45 46 47

B r a b r o o k , Provident Societies, p . 3 6 . F r e d e r i c k Rogers a n d F r e d e r i c k Millar, Old Age Pensions: Are They Desirable and Practical? ( 1 9 0 3 ) , p . 2 8 . Wilkinson, Friendly Society Movement, p . 3 7 . Gilbert, The Evolution, p . 175. Gilbert a r g u e d t h a t , b y t h e 1890s, t h e older a n d smaller societies were ' t h e nearest to b a n k r u p t c y ' , b u t even t h e larger societies 'were in m a n y cases u n a b l e to take t h e steps necessary to insure solvency'. Ibid., p . 174.

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chiefly out of the tendency of the societies to operate on a pay-as-you-go basis, funding current benefits out of current contributions and holding little in reserve - a technique so tempting that it was to become the practice for state National Insurance in the twentieth century and has been adopted by all individuals who maintain personal overdrafts. Thus trade unions who ran benefit schemes had, on average, only fifteen months' income in hand at any one time.48 As a result, it was relatively easy for the societies to reduce their deficiencies. All they had to do was raise their contributions, be more rigorous in excluding or not admitting individuals who were cbad risks', and expel those lodges or districts that interpreted the insurance contract too liberally. (Sir Edward Brabrook himself admitted that 'nothing is more elastic than the contract made by a friendly society with its members'.)49 Periodically, the large societies did just this. For example, a valuation carried out in 1870 revealed the Manchester Unity to be 90 per cent solvent, with a deficiency of £1,343,447. The directors instructed the districts and lodges to increase the contributions of older members, to decrease some benefits, and to revise the benefits given to superannuated members. As a result, in the next quinquennial valuation (1875), the deficiency had been reduced to £372,168. However, by 1880 it was up slightly, at £627,820.50 In the 1900s, another reduction of deficiencies took place by means of such reforms. As a result, society membership fell slightly: between 1902 and 1908, the Ancient Order of Foresters contracted from 676,974 members to 630,683, and the Manchester Unity from 752,509 to 751,431. One estimate was that between 1880 and 1908 the net deficiencies of all friendly societies were reduced from £4,270,434 to £3,015,043. In 1910, the President of the Institute of Actuaries, George Francis Hardy, candidly admitted that previous valuations had given a far too pessimistic view of the societies' financial condition, and commended them on their reformatory moves to greater solvency.51 We can conclude, therefore, that societies deliberately ran deficiencies, but kept them under control.

48

49 50

51

Brabrook, Provident Societies, p. 36. One of the rather moralistic points made by actuaries was that this meant that, at any one time, younger members were paying for the benefits of the older members. Quoted in Old Age Pensions. A Collection of Short Papers, p. 28. Wilkinson, Friendly Society Movement, pp. 9 0 - 2 ; 'Assets and Liabilities', Oddfellows Magazine, vol. 15, no. 114, June 1884, p. 162. Alfred W. Watson, 'Some Points of Interest in the Operations of Friendly Societies, Railway Benefit Societies and Collecting Societies', Journal of the Institute of Actuaries, vol. 44, April 1910, pp. 171, 249, 258; Watson, Friendly Society Finance, Considered in its Actuarial Aspect (1912), pp. 6 - 7 .

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A demographic crisis? If the issue of insolvency is something of a red herring, so also is it the case that demographic factors do not by themselves explain the shift of attitude by the friendly societies towards state pensions. Longevity in adult years did not rise dramatically in the second half of the nineteenth century. Increased life expectancy at birth was largely a consequence of the reduction in infant mortality. As has been shown, between 1854-60 and 1890-1900 (the period in which this demographic problem is said to have developed) the life expectancy of a 20year-old male only rose by only 2.5 years - hardly enough to precipitate a major actuarial crisis. Hence the average age of Manchester Unity members rose from 35.62 years in 1868 to 36.91 years in 1893.52 Nor were the societies exceptionally burdened by older members. Although the number of people aged 65+ in Britain rose from 700,000 to 1,500,000 between 1841 and 1901, rapid population growth ensured that they remained a constant proportion of the total population at just under 5 per cent. One authoritative estimate was that in the Manchester Unity in 1897, 30,234 members out of a total of 673,394 were aged 65+ (4.5 per cent). In the Foresters in 1891, the proportion was even lower, at 2.6 per cent.53 Recent analysis by James Riley shows that the 'curve of morbidity' according to age followed roughly the same trajectory for different periods in the nineteenth century; by the end of the century, claim levels for all age groups were higher, especially for those aged 65+, but not on such a scale as to warrant impending catastrophe.54 The life-tables cited by Gilbert demonstrate this - though he draws an erroneous conclusion from them. Farr's English Life Table No. /, based on mortality between 1838 and 1854, showed that, for each million male births, 651,903 men would reach the age of 20, and 531,697 would reach the age of 40. Tatham's English Life Table No. IV, based on mortality between 1891 and 1900, showed that, out of each million male births, 711,714 would reach the age of 20 and 615,964 would reach 40. Gilbert argued that this constituted an increase in the survival rate of men aged over 40 of 15.8 per cent in fifty years - a significant increase.55 However, Gilbert mistakenly used the one million as the denominator. Instead, the number of survivors at age 20 should be 52 53 54 55

Oddfellows Magazine, vol. 2 6 , n o . 2 4 4 , April 1 8 9 5 , p . 102. Ibid., p . 110; W a t s o n , An Account, p . 16. Riley, 'Disease W i t h o u t D e a t h ' , p . 5 5 6 . Gilbert, The Evolution, p . 1 7 1 , footnote.

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used, since this was the age from which friendly society contributions would normally be made. On this calculation, 81 per cent of 20-yearolds were predicted to survive to age 40 in 1854; by 1900, this had only increased to 87 per cent, or by 7.4 per cent. In addition, the high rate of contribution lapses (as we have seen, 50 per cent was an authoritative estimate) whittled down the number actually surviving as friendly society members at the age of 65 (though to some extent this was countered by re-joining). To be sure, the life expectancy of friendly society members in adult years was higher than that for the general population; likewise, their death-rates at every age below 75 were lower. But life-tables alone do not explain why the friendly societies were experiencing some financial difficulty in the 1890s. It is evident, therefore, that life-tables alone are no explanation: the demographic effects were too weak. What was undeniably causing problems was the rise in sickness benefit claims and, more importantly, the longer duration of such claims - a rise that was occurring at all ages, but which was most pronounced among older members. There are two possible explanations for this. The first is that, quite simply, the fall in mortality over the course of the nineteenth century was accompanied by lowered health status. In effect, the one was the corollary of the other. This phenomenon at first sight appears paradoxical: why should advances in living standards, quality of environment and, to a lesser extent, medical intervention have improved the rate of survival but lowered the aggregate health status of those who survived? This paradox was understood at the time - for example, by authorities as far apart as Francis G. P. Neison, Snr, in Contributions to Vital Statistics (1845), and Edgar Collis and Major Greenwood in The Health of the Industrial Worker (1921). The most important contemporary investigation was that undertaken by Alfred Watson, a consultant actuary to the Manchester Unity, and published in 1903. Watson showed that sickness benefit claims had risen at all ages in the Manchester Unity between 1846-8 and 1893-7, but the highest rates of increase had occurred among those members aged 65+. Thus the 'weeks of sickness' experienced by those aged 65+ had risen from 1.8 per cent of the total weeks of sickness to 31.6 per cent over that period. Watson noticed that morbidity varied by region and occupation, but these variations did not seem to explain the paradox of falling mortality and rising morbidity: as far as could be ascertained (and there were enormous problems in measuring occupational status over time), there had been no significant increase in those occupations (such as labouring) that had higher morbidity rates. The most striking feature was

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the increase in protracted sickness (i.e. more than two years' duration) between 1866-70 and 1893-7. 56 More recently, the economic historian James Riley has investigated the problem, using several large data sets from different periods in history, including nineteenth-century British friendly society records. Riley's intriguing hypothesis is that there takes place a process of 'insult accumulation', whereby the more incidents of sickness an individual experiences, the more they will experience future sickness. Hence if mortality falls there will be more survivors with 'impaired lives' whose lower health status will reveal itself in higher sickness benefit claims.57 However, taking the recorded incidence of sickness at its face value produces a somewhat one-dimensional explanation. As any medical sociologist will testify, the measurement of health status by morbidity rates is inherently problematic: the reporting of sickness will depend upon many variables, including self-perceptions (or 'lay definitions') of sickness, the willingness of individuals to seek expert diagnostic procedures, the availability of health care, and so on. Self-definitions of sickness may be affected by a range of psycho-social factors (for example, stress), many of which may originate in the economy and the labour market.58 All forms of social dependency - unemployment, vagrancy, disability, psychiatric disorders - increase in times of economic recession and industrial re-structuring. Hence the recession of the inter-war years produced a rise in rates of long-term disability and sickness, alongside medical improvements that should have had the opposite effect (indeed, Watson himself investigated this at one point).59 Conversely, these rates fell during the full-employment years of World War II. A final point to note is that concepts of 'sickness' and 'unemployment' are twentieth-century constructs, being in part a function of categorisations introduced by state welfare. As Noel Whiteside has argued, the introduction of separate categories of 'sick' and 'unemployed' in the 1911 National Insurance Act 'superimposed a rigid classificatory system on a far more amorphous social reality than is sometimes supposed'. Before then, the two categories merged imperceptibly into each other: those with lower health status would be more likely to be displaced from the labour market and, once so marginalised, would suffer a degree of poverty that would exacerbate their medical 56 57

W a t s o n , An Account. J a m e s C . Riley, Sickness, Recovery and Death: A History and Forecast of III Health ( 1 9 8 9 ) ,

pp. 171-2. 58

59

A n example can be found in the 1980s and 1990s - decades of economic re-structuring - which witnessed the appearance of n e w stress-related disorders. Report by the Government Actuary on an Examination of the Sickness and Disablement Experience of a Group of Approved Societies in the Period 1921-27, C m d . 3 5 4 8 , 1930.

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condition, or would be more likely to define themselves as unfit for work through infirmity.60 In a moment of frankness, the Chief Registrar warned against taking the evidence of rising sickness at face value: 'sickness benefit in friendly societies was a question of extreme difficulty', admitted Brabrook, being subject to so many variables: 'He thought it was really hardly possible to construct a coherent definition of what sickness in friendly societies really was. It was not in any sense a definite physical fact; therefore, one had to deal with a variety of considerations.'6 * An interesting early exploration of the effect of the labour market was published by T. S. Ashton in the Economic Journal for 1916. Using data from the Amalgamated Society of Engineers (ASE), Ashton showed that claims to both sickness benefit and superannuation benefit tended to rise most rapidly during, or just after, periods of economic recession (for the ASE, these peaks were 1869, 1879, 1898 and 1909). Conversely, during the full-employment First World War (creating an exceptional demand for the labour of engineers) these rates dropped significantly. Hence the proportion of ASE members on superannuation benefit fell from 5.4 per cent in 1909 to 2.8 per cent in 1915, and those on sickness benefit from 10.2 per cent in 1908 to 1.8 per cent in 1915. There was thus an exceptionally low rate of recorded morbidity for ASE members during the war, despite the considerable visual evidence that they were working long hours under great stress; the fact that they saw their work as vital to the war effort meant that they were willing to ignore any latent sickness. Ashton surmised that, after the war, there would be a rise in sickness claims as the cumulative effects of the wartime health strains revealed themselves as a greater propensity to take early retirement via long-term sickness benefit.62 By contrast, James Riley discounts any major causal connection between economic factors and morbidity rates, since rising sickness benefit claims in the late nineteenth century occurred alongside improving real wages and marked fluctuations in unemployment. In addition, he argues that, since Watson's evidence showed that sickness was becoming more protracted in duration rather than more frequent in incidence - in other words, there was no great change in a worker's propensity to enter a sickness claim - then sickness claims are 'a poor proxy for economic performance'. Deploying a behavioural, 'rational 60

61

62

N o e l Whiteside, 'Unemployment and Health: A n Historical Perspective', Journal of Social Policy, vol. 17, pt. 2, April 1988, pp. 1 8 8 - 9 . C o m m e n t by Brabrook, 'Discussion on Dr. Snow's Paper', Journal of the Royal Statistical Society, vol. 7 6 , pt. 5, April 1 9 1 3 , p. 5 1 1 . T. S. Ashton, 'The Relationship Between U n e m p l o y m e n t and Sickness', Economic Journal, vol. 2 6 , Sept. 1916, pp. 3 9 6 - 4 0 0 .

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choice' model, he argues that more protracted sickness was partly a consequence of 'affordable convalescence', resulting from higher living standards.63 However, such a hypothesis is posited on the assumption that workers fundamentally do not want to work; if it were plausible, steadily improving living standards in the twentieth century would have been accompanied by increases in absenteeism from work through sickness that would have reached staggering proportions. In addition, it fails to take account of the fact that aggregate data on unemployment and real wages are relatively crude economic indicators, since they mask the profound sectoral shifts that were taking place in the late Victorian labour market, combined with technological innovation. Both of these were creating increasing job insecurity, which was manifested as an increasing 'sickness experience'. In the case of older workers, the disappearance of jobs - noted, as we have seen, by Charles Booth and many other insightful social commentators - must have led to their denning themselves as 'worn-out' or 'infirm' not according to some objective standard of health, but according to the diminishing opportunities offered by the labour market. Likewise, when employers increasingly told an older worker that he was 'too old to work' or 'too ill to work' or 'too slow to work', their judgements must have reflected changing economic realities. The increase in protracted sickness is consistent with a permanent disappearance of jobs. Here one is up against intriguing problems of evidence interpretation. The friendly society definition of sickness was 'inability to follow one's usual employment'. There were thus two elements to the 'sickness experience equation': the perceived health status of the individual, and the supply of jobs. Both elements need to be considered; but this is something that middle-class contemporaries conspicuously failed to do. Tantalisingly, what was not said was more striking than what was said: repeatedly, middle-class commentators alluded to the problem, but held back from openly discussing it. They could only define it in moralistic terms. For example, Sir Edward Brabrook pointed to the rising sickness benefit claims for each ten-year cohort of friendly society members, and noted that: 'an age comes when a man is not able to work any longer, and that age is approached by a gradual increase of the length of time during which a man, on the average, is unable to work'. Pointedly, he warned the societies that 'mere inability to work through old age is not within the terms of the contract' of insurance; but he understood why 'a liberal construction of the contract should exist, where a member has no 63

Riley, Sickness, pp. 172-6.

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source of maintenance, and would otherwise be compelled to seek relief from the Poor Law authorities'. Commentators such as Brabrook acknowledged that sickness claims could be affected by factors such as occupation, the character of the individual, strictness of benefit administration, region and even climate - but they pointedly refused to discuss economic restructuring. The most oft-cited explanation was that there was a considerable element of malingering which could not be anticipated by model life-tables.64 The 'moral hazard' explanation was also suggested by G. H. Ryan (a vice-president of the Institute of Actuaries), after hearing a preliminary version of Alfred Watson's important 1903 paper on sickness experience. Ryan commented that 'sickness results did not solely depend upon the law of nature, but the human will entered into them . . . there was what was called "malingering" on funds'. Ryan attributed this to lax administration, or higher benefits - the knowledge of which corrupted members. Another discussant warned that 'sickness was an extremely difficult subject to deal with', adding, significantly, that 'members were sick in times of bad trade, or want of employment'. Ralph Price Hardy (also a vice-president of the Institute) likewise hinted at possible labour market causes when he warned the societies that 'the premium for genuine human sickness did not provide an "out-of-work" benefit'; but Hardy would not elaborate.65 Alfred Watson was similarly elliptical in his analysis. He admitted that the explanation for increasing claims was 'probably not to be found in anything capable of statistical expression', but refused to take cognisance of labour market factors. Instead, he suggested a decline in working-class morality: there had been an increase in 'the claim habit' - by which Watson meant that the old stigma attached to claiming had gone.66 The problem with this 'moral hazard' explanation (always suggested by contemporaries in the most guarded of terms) was that it was inconceivable that the section of the working class most deeply imbued with Smilesean, capitalist values should have been avoiding work through fictitious sickness claims. Nor would friendly society members have allowed it. They would, however, have turned a blind eye to applications for sickness benefit from those of their members who were permanently displaced from the labour market, and society doctors 64 65

66

Brabrook, Provident Societies, pp. 8 4 , 8 8 , 1 1 2 - 1 3 . C o m m e n t s by G. H . Ryan, C. H . E. Rose and Ralph Price Hardy, in discussion of Alfred W. Watson, ' T h e Methods of Analysing and Presenting the Mortality, Sickness and Secession Experience of Friendly Societies, with Examples Drawn from the Experience of the Manchester Unity of Oddfellows', Journal of the Institute of Actuaries, vol. 3 5 , July 1900, pp. 3 2 3 - 4 , 327, 329. C o m m e n t by Watson, 'Discussion on Dr. Snow's paper', p. 5 1 3 .

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would have colluded by being more inclined to enter 'senile debility' on a medical certificate.67 Given that in the nineteenth century the boundaries between 'sickness', 'unemployment' and 'old age' were exceedingly blurred, the rise in sickness benefit claims must have reflected shrinking labour market opportunities. An increasing number of older friendly society members were defining themselves as 'worn-out' because there were a decreasing number of jobs for them. The societies' attitude to state pensions The attitude of the friendly societies towards the movement for old age pensions was complex. Superficially, a contributory state pension scheme threatened their very existence; and, given how few of their members had recourse to the Poor Law in old age, they had no direct interest in the problem of the aged pauper or the need to lower Poor Law expenditure.68 But the societies were very conscious of the poverty of the majority of the working class who were not their members. They were thus caught between a desire to perpetuate their own institutions and an understanding of their own irrelevance for the poorest in society.69 Thus a Manchester Unity member forcibly reminded his brethren that there were six million workers not in friendly societies who in old age needed the help of a pension scheme like Charles Booth's.70 Societies were also aware that a state old age pension scheme would relieve them of the obligation of supporting their older members, who were their greatest financial liabilities. All were agreed that older members presented a rather more difficult financial problem than younger ones: as Alfred Watson put it, 'if a branch is relieved of all its liability in respect of the older members, a position approaching solvency is frequently secured'.71 It is clear, then, that the 'attitude' of the societies was complex and divided. A further complicating factor was that the societies had differing attitudes depending upon which type of pension scheme was under discussion. They were implacably opposed to Blackley's scheme: being universal, compulsory, contributory and initially including sickness 67

68

69

70

71

See letter on the apparent increasing incidence of this, in Oddfellows Magazine, April 1895, p. 118. T h e societies felt that even the small number of friendly society members who went on to the Poor Law in old age was an over-estimate, since it mainly consisted of exmembers dividing societies. To the purist, these were not true friendly societies. Pat T h a n e , 'Non-Contributory Versus Insurance Pensions 1 8 7 8 - 1 9 0 8 ' , in Pat T h a n e (ed.), The Origins of British Social Policy (1978), p. 93; Treble, ' T h e Attitudes', p. 275. George Turner, 'State Pensions in Old Age', Oddfellows Magazine, vol. 27, no. 262, Oct. 1896, p. 310. Watson, Friendly Society Finance, p. 9.

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benefit provision, it most obviously threatened their business. As we have seen, matters were not helped by Blackley's clumsiness in casting aspersions on the societies' financial soundness by claiming that nine out of ten of them were insolvent. Thus although Blackley dropped his sickness benefit plan, the damage had been done: a special friendly society conference in 1887 rejected his scheme. Likewise, they voiced strong objections to the 1887 Select Committee on National Provident Insurance. 72 The second scheme under consideration was Joseph Chamberlain's voluntary, contributory one. Chamberlain was politically astute, and was thus very conscious of the potential opposition of the friendly societies. In evidence to the Aberdare Commission, he expressed his respect for their power: I attach the greatest importance to the co-operation of the friendly societies. They are brought into communication with all that portion of the working classes which is already thriftily minded . . . Their criticism would be very damaging . . . their opposition might easily be fatal and if they were universally to be opposed to any scheme that was proposed of this kind, I do not say that their opposition would be fatal, but I certainly should think twice myself before I attempted to proceed in face of a hostility which I should myself consider to be so important and so dangerous.73 As with every Chamberlain utterance, however, one is unsure how far he was talking up such opposition for the sake of political ends (in this case, inaction), or how far he was trying to win over waverers within the societies. The ambivalence of the friendly society position in the 1890s is revealed in Chamberlain's printed 'Notes of Evidence' to the Aberdare Commission (with his italics): 'Importance of their co-operation. Their political influence. Organised opposition might be fatal. Hitherto most of leading officials have criticised adversely', reads the relevant passage; but it is shortly followed by the rather more ambiguous entry: 'Signs of altered opinion. Letters from officials and members. Main reason of opposition, fear of any increased control or interference [by the state] .' 74

Thus throughout his evidence to the Aberdare Commission he praised them to the skies, and made strenuous attempts to show that his proposals would not threaten them. For example, one of his schemes of the 1890s envisaged a state subsidy for a contributory scheme administered by friendly societies. But they tended to remain suspicious of 72

73 74

Treble, 'The Attitudes', pp. 2 7 0 - 1 ; Report from the Select Committee on National Provident Insurance ( 1 8 8 7 ) , p. 14. Royal Commission on the Aged Poor, vol. Ill, pp. 6 6 5 - 6 . 'Notes of Evidence by T h e Right H o n . J. Chamberlain, M.P.', Joseph Chamberlain papers, JC 6/3/4/8.

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Chamberlain's political ambitions, and pointed out that his proposal would do nothing for male casual labourers and women. 75 The third type of state old age pensions scheme discussed in the 1890s was one that would provide a state subsidy to friendly societies or other thrift and saving institutions. On this, opinion was divided. In evidence to the 1893-5 Aberdare Commission, Sir Edward Brabrook asserted his opposition to such a subsidy, but at the hearings of the Rothschild Committee (which specifically examined such schemes) James Kirk (of the Ancient Order of Foresters) declared that such a scheme would help the societies. Likewise, Tom Hughes (board of directors of the Manchester Unity) said that state interference of this kind 'would be for the benefit of friendly societies'.76 Not surprisingly, what the societies feared most was a state contributory scheme, since it would have been impossible for their members to contribute twice over. Thus after some initial hostility they became quite welcoming towards the fourth type of scheme discussed in the 1890s Charles Booth's non-contributory, universal one (though there were some reservations that it might weaken the incentive to save). Since it would be funded from taxation, it would not draw off any of their business. Indeed, it might permit them to cease paying sickness benefit at age 65. Thus Reuben Watson declared his support for the Booth scheme, though he did express his concern that friendly societies should be doing more to encourage their members to take out proper annuity schemes; likewise the Revd Frome Wilkinson endorsed Booth. 77 The gradual thawing of friendly society opposition to the idea of state pensions has been well discussed by James Treble and others. 78 Not only was their attitude mixed, depending on the type of scheme under consideration, but there was a difference of attitude between the leadership and the consultant actuaries (who tended to appear before official committees), and the rank and file. There was also greater receptivity towards state help on the part of the smaller societies. It is thus quite wrong to think of one monolithic 'friendly society view': there were substantial differences of opinion, and one has to distinguish between the rather conservative institutional identity of the big societies and the attitude of their individual members. Thus, when asked if a state pension system for friendly society members would ease the burden of 75

76

77 78

'State Pensions for the Thrifty', Oddfellows Magazine, vol.26, no. 242, Feb. 1895, pp. 3 3 - 4 0 . Report of the Royal Commission on the Aged Poor, vol. Ill, p. 605; Report of the Committee on Old Age Pensions, 1898, C.8911, Minutes of Evidence, pp. 29, 40. Royal Commission on the Aged Poor, vol. Ill, p. 619, and vol. II, p. 311. Treble gives a full account of events in the 1890s and 1900s in 'The Attitudes', pp. 2 8 0 - 9 9 .

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sickness benefit to their older members, James Kirk replied: 'I believe so. I believe that is the feeling of the rank and file; mind you it is not the feeling of our leaders. I am bound to say that.'79 In short, by the end of the 1890s there was a vigorous debate within the friendly society world over the question of non-contributory pensions. On the one hand, the year 1898 saw the formation of the Old-Age State Pension League which wanted only a scheme for members of thrift agencies; on the other hand, in the following year there was formed the National Committee of Organised Labour for Promoting Old Age Pensions, which drew support from many of those very trade unionists who were staunch friendly society members and campaigned for universal, tax-funded state pensions at age 60. At the famous Browning Hall Conference of 13 December 1898 (usually taken to be the start of the organised labour movement's campaign) friendly society participation was insignificant; but, of the 630 delegates who attended a later conference at Birmingham (on 25 March 1899), fully 175 were from the Manchester Unity, 132 from the Foresters and 40 from three smaller societies. Many friendly society members were, on an individual level, active in the pensions campaign: for example, W. C. Steadman (chairman of the TUC's Parliamentary Committee) had been a member of the Hearts of Oak Benefit Society for thirty years; though he was 'as keen a friendly society man as he was a trade unionist', he felt it was now time for the societies to recognise the limitations of their cover, and support universal, non-contributory pensions.80 This view was also expressed by many participants at the labour movement's 1902 pensions conference at the Memorial Hall, Farringdon, London. Most speakers recognised the 'strong feeling' on the part of friendly societies towards noncontributory state pensions that would go to the 'thriftless' in society: Frederick Maddison, for example, believed that workers should join a friendly society - 'he regarded the man who ignored co-operation or friendly society as lost to all sense of his own conduct'. But most delegates recognised that friendly societies could never cover women and the low-paid.81 By the late 1890s and early 1900s, socialist campaigners were criticising the societies for their insularity, passivity and conservatism. They were being seen as increasingly out of touch with the growing radicalisation of the mainstream labour movement. Frederick Rogers pointed out that the friendly society movement did not appeal 'to ardent 79 80 81

Report of the Committee on Old Age Pensions, 1898, Minutes of Evidence) p. 4 0 . Report of Proceedings of the Thirty-Fourth Annual Trades Union Congress, 1901, p. 75. Report of the Old Age Pensions Conference, 1902.

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souls who werefilledwith a zeal for reform. Its aim is simply to make the best of things as it finds them'; for example, the societies did not join the struggle for higher wages. They were not based upon any great principle other than saving, said Rogers, and 'hoarding, even when it is redeemed from all its sordidness by the touch of a fine social enthusiasm, does not carry us far in facing the poverty problem'.82 Thus any scheme based upon a state subsidy to friendly societies would not work: it would be unfair to tax everyone just to benefit society members; the state could not underwrite insolvent societies; in many regions, societies did not exist; many could not join a society because they could not pass the medical inspection on entry; and the societies did nothing for women and the low-paid.83 Interestingly, this critical stance caused socialist pension campaigners to over-emphasise the 'insolvency' of friendly societies as much as did the middle-class actuaries.84 Criticisms like these had the desired effect, as did the societies' awareness that they were becoming increasingly at odds with the majority of the labour movement. By 1902 and 1903, motions in favour of state pensions had been passed by the National Conference of Friendly Societies. The first of these declared 'That it is the duty of the state to provide an old age pension of not less than 5s Od a week to all thrifty and deserving persons of 65 years and upwards where unable to work and in need of the same'. Though this could have been interpreted as a call for a Chamberlain-style scheme limited to the friendly societies, Frederick Rogers interpreted this event as the societies' leadership belatedly coming into line with the TUC and the Co-operative Congress.85 In 1907 even the Ancient Order of Foresters (which had been intransigently opposed) announced its support for selective, non-contributory pensions. But friendly society opinion continued to be divided right up to the time of the passage of the 1908 Old Age Pensions Act: a survey of society opinion on non-contributory state pensions (conducted by the Chief Registrar) showed that, of 151 societies replying, 67 thought that such a scheme would 'have an injurious effect' on them, 64 thought it would not, and 20 societies refused to commit themselves.86 However, there is no doubt that the 1908 Old Age Pensions Act and the 1911 National Insurance Act helped the societies by enabling them to 82 83

84

85 86

Rogers a n d Millar, Old Age Pensions, p p . 2 7 - 9 . N a t i o n a l C o m m i t t e e of Organised L a b o u r , Why We Should Not Subsidise the Friendly Societies to Get Old-Age Pensions (c. 1 9 0 0 ) . See, for e x a m p l e , F r a n c i s H e r b e r t S t e a d , How Old Age Pensions Began to Be (c. 1 9 1 0 ) , p . 127. Rogers a n d Millar, Old Age Pensions, p p . 5 4 - 5 . Gilbert, The Evolution, p . 2 2 0 .

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adopt changed life-tables for new entrants which provided for the cessation of sickness benefit at the age of 70. 87 In explaining the shift of attitude of the friendly societies towards state pensions, one not only has to distinguish the different types of pension proposal, but one must also place the societies in a broader economic and political context. As has been argued in this chapter, an interpretation which over-stresses demographic and epidemiological factors such as that advanced by Bentley Gilbert - only tells part of the story, and ignores the profound changes that were taking place in the labour market. A complex and at times rather technical refutation of Gilbert's thesis has been offered in this chapter, and this refutation accords with the testimonial evidence of contemporaries. For example, during the proceedings of the Rothschild Committee, Tom Hughes (of the Manchester Unity of Oddfellows) was specifically asked by Lord Rothschild: 'Do you think that the demand for state aid [for friendly societies] has anything to do with the actuarial unsoundness of some of the lodges, or do you think that it is a spontaneous feeling that the state ought to help those who help themselves by care during certain periods of their life?' Hughes replied: 'I think that to a large extent it is a spontaneous feeling on the part of the members.'88 What Hughes identified as a 'spontaneous feeling' was actually the product of growing insecurity in the labour market and a changing political culture. Thus a crucial factor in the societies' shift of attitude was that the labour movement generally was becoming more politicised. By the end of the 1890s, the craft unions were coming round to supporting the idea of an independent labour representation in parliament, and were less off-hand towards the new unskilled unions. As many social historians have observed, the 'labour aristocracy' was feeling increasingly politically insecure, and unable to survive on its own. Friendly societies were not a conservative island unto themselves: their members also occupied the political world of organised labour. As the general labour movement took up the cause of non-contributory universal old age pensions with growing enthusiasm in the 1890s, so were the friendly societies pulled along in its wake. 87 88

B r o w n a n d Taylor, Friendly Societies, p p . 9 2 - 3 . Report of the Committee on Old Age Pensions, Minutes of Evidence, p. 2 9 .

The labour movement and the state

Having begun as a highly conservative movement, initially dedicated to a tightening-up of the Poor Law and then encompassing industrial concerns about the alleged inefficiency of the 'worn-out' worker, the campaign for old age pensions took a very different turn in the 1890s. It became the central demand of the British labour movement's social programme, and part of a wider socialist strategy for redistributing wealth through welfare policies. After growing interest shown by the Independent Labour Party and the Trades Union Congress in the 1890s, the socialist demand for pensions was expressed in the 1900s through the 'National Committee of Organised Labour for Promoting Old Age Pensions For All' (NCOL). This organisation was the principal pressure group that brought about the 1908 Old Age Pensions Act. The role of the organised labour movement was crucial, especially in ensuring that the 1908 scheme was non-contributory.

Socialism and old age pensions After its hesitant beginnings, socialism in Britain came of age in the 1890s with the formation of the Independent Labour Party (ILP) in 1893. What distinguished the ILP was its commitment to a clearly denned socialist programme that would redistribute wealth to the working class. The 'social' programme passed at the inaugural conference (at Bradford, on 13 and 14 January 1893) demanded: the abolition of overtime, piecework and child labour; a maximum eighthour day in all trades and industries; provision for the sick, disabled, widows and orphans (to which was added in the following year 'the necessary funds to be obtained by a tax upon unearned incomes'); and collective ownership of the land and all means of production, distribution and exchange. There was a 'political' programme, seeking the reform of parliamentary democracy (including the abolition of the monarchy and the House of Lords); and a 'fiscal' programme, calling for the abolition of indirect taxation and the introduction of a 137

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graduated income tax.1 By 1896, the demand for pensions was more clearly defined: 'state pensions for every person at 50 (fifty) years of age, and adequate provision for all widows, orphans, sick and disabled workers'.2 Explicit discussion of old age pensions intensified at ILP Annual Conferences from 1899 onwards. Keir Hardie gave strong support in his 1899 chairman's address, and motions in favour followed in 1902, 1903, 1906, 1907 and 1908. At the same time, other socialist groups were voicing similar demands. H. M. Hyndman's Marxism-influenced Social Democratic Federation also sought old age pensions from the age of 50, with no qualifying conditions.3 The first appearance of the pensions issue at the TUC Annual Conferences came in 1892 (a year after Charles Booth and Joseph Chamberlain launched their campaigns). There was some suspicion that it was a fraudulent political issue: it was one 'we must approach with caution. There is a catchy sound about it, meant probably to snare the unwary', and Poor Law reform was said to have greater priority. But in the following year John Hodge introduced a motion in favour of 'a national State-aided system of old-age pensions', and similar motions appeared at practically every TUC Annual Conference for the next few years.4 There were several important reasons for the labour movement's espousal of old age pensions in the 1890s. First was the 'endowment' of old age. The term 'endowment' was frequently used by radicals in the 1890s and 1900s, and it requires a brief explanation. Normally a term applied to wealth inheritance, it had been deliberately commandeered by socialists to imply that the working class should enjoy the same automatic 'citizenship' right to support from the state in times of need that the wealthy enjoyed through family legacies. Hence 'motherhood endowment' was also a goal of some socialists and feminists in the 1900s, before it slowly metamorphosed into the more conservative family allowances movement of the 1920s. The ILP's social programme thus demanded the 'endowment' of those who found themselves in a position of economic distress through the contingencies of accident, illness, old age, orphanhood, etc. - a recognition that there were particularly vulnerable points in the working-class life course. The groups to be endowed were those who 1

2 3

4

Independent Labour Party. Report of the First General Conference, 1893, p. 10; Minutes of the Second Annual Conference of the Independent Labour Party, 1894, p. 13. Minutes of the Fourth Annual Conference of the Independent Labour Party, 1896, p. 33. A. M. MacBriar, An Edwardian Mixed Doubles: The Bosanquets versus the Webbs: A Study in British Social Policy 1890-1922 (1987), p. 91. Report of the Twenty-Fifth Annual Trades Union Congress, 1892, p. 29; Ibid., Twenty-Sixth,

1893, p. 50.

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were marginalised from the labour market. As such, socialists unwittingly adopted the 'social capital' criteria of liberal Poor Law reformers who advocated 'generous' state provision for those irrelevant to the capitalist process. They also implicitly accepted the 'male breadwinner' model of social relations within the family: income support was only to be provided for the working-aged woman if she was 'husbandless' through the death, illness or disability of her male provider - an assumption that reflected the low formal labour force participation of married women at that point in history. Interestingly, the ILP on occasions even regarded some women's work as brutalising and enslaving: it was a scandal that some wives and mothers were 'compelled to go to the mills and factories because their husbands can't earn sufficient to keep their families in necessaries'.5 Such endowment of the marginalised was expressed in language that stressed rights, justice and the claims of citizenship, rather than the need to remove them from the Poor Law in order to bring punitive sanctions against the able-bodied male. A second motive for supporting old age pensions was that the endowment of old age would be one of several social policies through which wealth distribution would be achieved. Here we must be wary of attributing one single, monolithic view to all members of a labour movement that was extremely heterogeneous. On the moderate wing were activists like Francis Herbert Stead and Frederick Rogers, who viewed old age pensions primarily as a moral question of social justice. Stead's famous account of the labour movement's campaign, How Old Age Pensions Began to Be (1910), is written in an almost mystical Christian socialist style, with virtually no trace of hostility towards the capitalist class. Stead and Rogers viewed old age pensions very much as a 'single issue' campaign, in which it was important to build bridges with all political parties and interest groups: 'Keep yourself carefully from entangling alliances with any political parties. Our demand is not a partisan one. It is supported by men of different parties, and our movement must be colour-blind to party distinctions. Our appeal is to "good men in all parties".'6 After the 1908 Act had been passed, Rogers was convinced that the main reason for the National Committee's success had been its non-partisan approach. Of course, this 'classless' moral stance was also tactically necessary in order to convert a parliament that contained very few working men with labour sympathies. Like many socialists of the 1900s, Rogers viewed the existing parliamentary 5 6

ILP pamphlet, To the Women of the ILP (n.d., c. 1890s). F. H. Stead, Hints to a Helper (National Committee of Organised Labour pamphlet, n.d. c. 1901); see also, Frederick Rogers, Politicians and Old-Age Pensions (n.d., c. 1903).

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democracy, based as it was upon an exceedingly limited franchise, as something of a fraud: he saw the party system as 'simply sectarianism in politics'.7 By contrast, radical left-wingers viewed old age pensions as part of a broader strategy for using the parliamentary machinery to pass expensive pieces of social legislation, involving punitive levels of income tax levied on the rich: by this parliamentary, entirely constitutional means, the capitalist class would be stripped of its wealth and power. (This rationale for state pensions was to be a strong motive of left-wingers, until cleverly outmanoeuvred by the Conservative government's 1925 Widows', Orphans' and Old Age Contributory Pensions Act.) A universal, non-means-tested pension of 5s Od per week at the age of 60 (or even 50), funded entirely out of income tax, would be highly redistributive. As W. J. Vernon said, in a very socialist presidential address to the 1899 TUC Annual Conference, 'We are annually gathering up the leaves, whilst the evil tree, with its millions more of leaves yet to fall, is practically left untouched. The evil tree should be cut down.' Old age endowment was thus to be funded cby a reasonable and equitable system of taxing ground values and an extension of the graduated income tax', in which 'no taxation would be exacted from the working class'.8 It is thus slightly missing the point to argue, as Peter Hennock has done, that the NCOL 'were political innocents, not much concerned to calculate the relation between means and ends'.9 Instead, they began from the presupposition that a socialist society was desirable, and possible to achieve by the parliamentary machinery. Repeatedly, socialists argued that the money was available to fund even the most expensive contemplated pension scheme (£26,000,000), and cited statistics to prove this. In Riches and Poverty (1910 edn) Leo Chiozza Money estimated that, of £1,844,000,000 total national income, 5,500,000 persons out of a total population of 44,500,000 received fully one-half, and the remaining half was received by the remaining 39,000,000 persons. More than one-third of the nation's total income was enjoyed by less than one-thirtieth of its people.10 Frederick Rogers quoted an Inland Revenue estimate that the increase in gross national income between 1894-5 and 1901-2 had been £209,896,000, an 7

8

9

10

National Committee of Organised Labour (NCOL), Tenth and Final Annual Report and Balance Sheet, July 1908-July 1909, (n.d.) p. 13. Report of the Thirty-Second Annual Trades Union Congress, 1899, p. 27; Ibid., TwentySixth, 1893, pp. 27,51. E. P. Hennock, British Social Reform and German Precedents. The Case of Social Insurance 1880-1914 (1987), p. 123. Leo Chiozza, Money Riches and Poverty (1910 edn), p. 48.

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11

increase of 32 per cent. Likewise, in the House of Commons in 1907 George Barnes argued that in 1900, nine rich men had died leaving estates totalling over £19,000,000, and that since 1900 forty-six had died leaving estates worth over £78,000,000. 1 2 A central aim of the labour movement at this time was thus to reform the system of taxation. Indirect taxes were seen as taxes on the poor, and were to be replaced by direct taxes on land, property and high incomes. The ratio of direct to indirect tax revenue had steadily increased over the course of the nineteenth century: in 1840-4, direct taxation had raised £12,800,000 and indirect taxation £37,400,000 (or a ratio of 1:3); by 1900-4, these figures were £59,400,000 and £67,400,000 respectively (nearly equal). In order to achieve what Peter Fraser has called 'a comfortable revolution by Act of Parliament', socialists in the 1900s proposed to abolish all indirect taxation, and add £72,000,000 to budgetary revenue raised by a steeply graduated income tax, providing a surplus for improved state education, old age pensions, maintenance for the unemployed, and the payment of MPs: this was 'the socialist budget'. 13 They were thus impatient with the claims of Chancellors of the Exchequer in the early 1900s that the middle and upper classes were 'overtaxed' and that budgetary surpluses should go towards reductions in income tax rather than state pensions. In short, the demand for old age pensions was expressed by left-wing socialists in the language of explicit class conflict. A third argument deployed in favour of pensions related to this class antagonism. It was maintained that the non-working class were already well endowed in their old age. The wealthy enjoyed inheritance, and the middle classes received private pensions or public service pensions paid for by the taxpayer. Hence George Barnes pointed out in 1906 that there were 171,000 ex-public servants receiving retirement pensions totalling £7,903,000. 1 4 (Interestingly, this was almost exactly what the 1908 state scheme was to cost in its first version.) Likewise, Keir Hardie's response to the question of where the money for pensions was to be found was merely to state that no such difficulty existed when public service pensions were paid; and George Barnes argued that, if the industrial system would not pay workers during their working lives the wages sufficient to put something by for old age, then the state had a moral obligation to provide old age pensions, just as it provided 11

12 13

14

Frederick Rogers, A Plea for Old-Age Pensions (c. 1907), pp. 3 - 4 ; Rogers, Our Aged Fellow Subjects (c. 1903). HofCDeb., 4s, vol. CLXIX, 12 Feb. 1907, col. 220. Peter Fraser, Joseph Chamberlain: Radicalism and Empire 1868-1914 (1966), pp. 284-6; Philip Snowden, An Autobiography (2 vols., 1934), vol. I: 1864-1919, ch. 9. Report of the Thirty-Ninth Annual Trades Union Congress, 1906, p. 146.

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'deferred pay' pensions for its servants. W. J. Vernon was less moderate in tone. On the alleged difficulty of finding the money for state pensions, he mockingly pointed out that 'No difficulty arises when the landlords or clergy are under consideration, or some great general, who had been responsible for the speedy exit from this world of a few thousands of black men.'15 The outbreak of the Boer War in October 1899 may have given Lord Salisbury's government the excuse to do nothing on the pensions issue, but it steeled the resolve of labour activists to reject the argument that universal state pensions were 'unaffordable'. The war eventually cost something like £250,000,000, and the TUC Annual Report for 1902 gleefully quoted Joseph Chamberlain as saying that, had the war cost twice as much, it would still haye been worth fighting.16 It is clear, therefore, that, in debating the 'affordability' of state pensions, socialists were operating from an entirely different set of political premises than were Liberal or Conservative politicians. Another quite separate argument for old age pensions advanced by socialists was that capitalism was entering a significantly new phase, characterised by technological innovation, new labour-saving machinery, a speeding-up of production methods, scientific management, greater alienation between capitalist and worker - and hence the displacement of older workers. Old age pensions would recognise the claims of those 'worn-out industrial workers' who lived in dread of hearing from an employer the words 'you are too old to work'.17 (One of the National Committee's most published pamphlets was Rogers's selfexplanatory The Worn-Out Workman: What is to be Done With Him? (c. 1900).) The increasing insecurity felt by all workers, and especially the aged, was described by W. J. Vernon to his fellow TUC delegates: The steady elimination of the direct employer, together with the rapid progress which is being made in the direction of trusts and combines and the continued introduction of wage-saving machinery, threatens the very existence of the workers, and should be sufficient to cause you to pause, and ask yourselves the question: In what position are we likely to find ourselves in the near future, pursuing the same methods as we are pursuing today?18 Thus TUC and ILP pension campaigners sought pensions paid from 15

16 17

18

Speech by Hardie, reported in NCOL, Seventh Annual Report and Balance Sheet, July 1905-July 1906, p. 15; Barnes, Report of the Fortieth Annual Trades Union Congress, 1907, p. 182; Vernon, Report of the Thirty-Second Annual Trades Union Congress, 1899, p. 48. Report of the Thirty-Third Annual Trades Union Congress, 1902, p. 33. Independent Labour Party. Report of the Fourteenth Annual Conference, 1906, p. 41; Francis Herbert Stead, How Old Age Pensions Began to Be {c. 1910), pp. 5-6. Report of the Thirty-Second Annual Trades Union Congress, 1899, p. 48.

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the age of at least 60, or at any age on the grounds of infirmity: the pension would be 'the right of every worker when incapacitated from further labour'.19 There was also a more self-interested trade union motive for endowing the 'worn-out5 worker - and one that was to grow in importance in subsequent years. The existence of a reserve army of labour had long been a concern of trade unionists: in Das Kapital, Marx had discussed the 'relative surplus population', which included those 'who have lived beyond the worker's average life-span'; they 'weighed down' the 'active army of workers' during periods of economic stagnation, and 'put a curb on their pretensions' during periods of over-production.20 The endowment of old age would encourage older workers to withdraw from employment, thus 'tightening up' the labour market: there would be removed a potential reserve army of labour, whose presence - in competition with younger workers - permitted employers to undercut trade-union-negotiated wage rates. Old age pensions and workmen's compensation were a dual strategy directed at this end. (For this reason, the labour movement was determined to improve the 1897 Workmen's Compensation Act.) As James O'Grady said in his president's address to the 1898 TUC Annual Conference: 'if preference will be given to the young men with whom the risks of accidents are less . . . pensions for old age will be advanced a considerable step nearer to realisation.'21 The contradictory implications of this argument went unremarked: on the one hand, the pension was to be a 'citizenship' reward for service in the labour market (service by women in the domestic sphere was little mentioned); on the other, older citizens were to be corralled off into economic uselessness. But to trade unionists, the evident reality was that late-industrial capitalism was already marginalising older workers, and would surely continue to do so. One other paradox worth noting is that trade union leaders, at this stage, were not awake to the danger (voiced by devotees of classical economics, such as the Charity Organisation Society) that paying pensions to older workers without a retirement condition or a means test would actually worsen the problem of a reserve army of labour by subsidising their low wages. Only later was this to become evident. Finally, old age pensions were placed in the context of Poor Law reform. Not surprisingly, the labour movement did not share the enthusiasm of Blackley, Chamberlain and Booth for a 'back to 1834' 19 20 21

Ibid., p. 48; ibid., Thirty-Seventh, 1904, p. 97. Karl Marx, Capital: A Critique of Political Economy, vol. I (1976 edn), p. 797. Quoted in W. C. Mallalieu, 'Joseph Chamberlain and Workmen's Compensation', Journal of Economic History, 10, May 1950, p. 56.

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policy of renewed deterrence towards the able-bodied male. Nor were its members obsessed with the fear that 'pauperisation' might lose its meaning if outdoor relief were relaxed: 'I am not concerned greatly about the question of pauperising', was Rogers' terse dismissal.22 Labour's desire, by contrast, was to replace the entire Poor Law by specific measures (old age pensions, widows' and orphans' pensions, 'work or maintenance' for the unemployed, expanded state education for children, and so on); and, short of that, to end what was seen as 'maladministration' (basically, the denial of outdoor relief to needy cases), to remove all civil disabilities placed upon paupers and to work for the full 'democratisation' of relief so that the working class could get elected to Boards of Guardians. For Rogers, the system of poor relief to the aged was 'clumsy, wasteful, and often needlessly cruel, and old age pensions would be cheaper, more humane, and more scientific as well'.23 Poor Law officials lacked the competence to decide between the 'deserving' and the 'undeserving'. The way the system operated in practice, those who had been thrifty during their past lives were denied relief, while the profligate were rewarded. Besides, Poor Law inquisition was humiliating: it 'violated the chaste reticence of the self-respecting poverty', by 'compelling it to lay bare its sacredly-guarded secrets to the public gaze'.24 Thrift would be best encouraged by paying universal state pensions as of right, entirely separate from the Poor Law. As we shall see, this concern with the penalisation of thrift was to be a recurring one in the labour movement's attitude to means-tested pensions after 1908. Hence as early as 1893, in his president's address to the TUC Annual Conference, Samuel Monroe advocated the total abolition of the existing 'poor-law and pauper-making system'. John Hodge's motion at that conference argued that the 'maladministration' of the Poor Law would be best remedied by a system of old age pensions 'by which no taxation would be exacted from the working classes', and which would not interfere with the existing superannuation schemes run by trade unions. (Trade union insistence on a universal pension system, with no means tests, arose partly from growing fears at this time of state interference in friendly society and trade union benefits, especially those that were used to subsidise strikes.) Other TUC delegates wished to see the election of 'working men' as Guardians.25 Motions on Poor Law reform followed at several TUC Annual Conferences, though by the 22 23 24 25

Rogers, A Plea, p . 8. Frederick Rogers, The Present Position of Old Age Pensions (n.d., c. 1 9 0 3 ) , p. 2. N C O L , Old Age Pensions for All. An Appeal to the Electors (n.d., c. 1900s). Report of the Twenty-Sixth Annual Trades Union Congress, 1 8 9 3 , pp. 3 0 , 5 0 - 1 .

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early 1900s it was obvious that the Poor Law was going to be replaced by alternative social legislation.

The National Committee of Organised Labour The labour movement's growing interest in old age pensions was transformed into a practical campaign in 1898. The moving spirit was Francis Herbert Steady warden of Robert Browning Hall, Walworth, London, who seems to have become interested in the question of old age pensions as one of several topical social issues. Stead had invited William Pember Reeves (of the New Zealand High Commission) to Browning Hall on several occasions to speak on his country's scheme (in the design of which he had been involved). Stimulated by this, Stead assembled a conference on 13 December 1898 at Browning Hall. This event was the acknowledged starting point of the labour movement's organised campaign. The Browning Hall Conference was attended by trade union leaders representing over half a million members, some trades council officials, and a motley collection of smaller friendly society figures. Prominent labour leaders included George Barnes (of the Amalgamated Society of Engineers), Will Crooks (chairman of the Poplar Board of Guardians), Frederick Maddison, MP, and J. Sansom (of the National Union of Gasworkers and General Labourers). As in all the labour movement's pensions agitation, the 'new unions' of the unskilled played an important part. The notable event was the appearance of Charles Booth. Though Booth was an unimpressive speaker, his presence gave enormous respectability to the gathering, and assisted Stead's efforts to make the pensions campaign a 'single-issue', non-party one. The underlying conservatism of Booth's position created few problems for his largely socialist audience, who seemed blithely unconcerned with the fact that Booth argued the case for pensions in the context of the need for a stricter Poor Law. As Peter Hennock has observed, all that mattered to the labour movement was that Booth shared their view that the aged should be lifted off the Poor Law.26 The Browning Hall Conference was followed by regional conferences, at Newcastle, Leeds, Manchester, Bristol, Glasgow and Birmingham (much to Joseph Chamberlain's embarrassment), at which Booth also spoke. With the campaign quickening in tempo, the government appointed the Chaplin Committee on 25 March 1899, and on 1 May Charles Booth published Old Age Pensions and the Aged Poor. Finally, on 26

Hennock, British Social Reform, p. 124.

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The campaign for old age pensions

9 May there was formed the 'National Committee of Organised Labour for Promoting Old Age Pensions for All'. The National Committee was to spearhead the labour movement's campaign for the next nine years. Reflecting Stead's and Rogers' desire to remain non-party, it sought to enlist the support of 'all politicians from whatever school who will work for a sound system of pensions for aged persons who need them'.27 Approval was also obtained from the organised churches. For example, a deputation was sent to the Archbishop of Canterbury in January 1900, and pledges were forthcoming from various senior bishops.28 Adopting the tactics pioneered by previous pressure groups, the National Committee published brief pamphlets which were sent out in large numbers and it networked energetically within the labour movement. It was funded by subscriptions from labour organisations, plus large annual donations from Charles Booth and George Cadbury: for example, in 1901-2 these two men gave £150 out of the NCOL's total subscriptions of £221 3s 6d. The publication of the Chaplin Report in July 1899 was the high point in the National Committee's first year, since it seemed likely to be followed shortly by a government promise of legislation. However, in October 1899 there occurred the outbreak of the Boer War. 'The great wave of passionate enthusiasm which has swept over the country', as Rogers put it, diverted attention from social reform and, more importantly, gave the Conservative government the perfect excuse for further delay.29 Within the cabinet, only Joseph Chamberlain showed any real commitment to the cause of pensions, and, as Colonial Secretary, he was fully occupied with the South African question. In addition, as the labour movement intensified its efforts and would obviously only settle for a universal, tax-funded pension scheme, so Chamberlain became increasingly evasive. 'Our second year has been full of events which have been almost entirely hostile to our work', wrote Frederick Rogers of the period July 1900 to July 1901. 30 But the National Committee did not let up in its efforts, and continued its propaganda work. It drew some comfort from the fact that parliamentary candidates were put under pressure on the pensions issue when campaigning in the 1900 general election. But there was acute frustration that a Parliament without a significant bloc of independent labour MPs proved continually evasive: 'Of vague sympathy there was enough and to spare, of sitting on the fence not a 27 28 30

N C O L , First Annual Report and Balance Sheet, July 1899-July 1900 (n.d.), p. 6. 29 Ibid., pp. 6 - 7 . Ibid., p. 11. N C O L , Second Annual Report and Balance Sheet, July 1900-July 1901 (n.d.), p. 9.

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little, and of a clear understanding of the conditions of the problem, some.'31 However, after the Boer War ended in 1902, the National Committee's campaign picked up. The TUC had instructed its Parliamentary Committee to convene a conference on old age pensions, and this was to produce the most significant event of 1902. On 14 and 15 January, a conference was held at the Memorial Hall, Farringdon, London, representing 118 trade unions, 12 trades councils and 74 co-operative societies. Because it was about to hold its National Congress in two months' time, the National Conference of Friendly Societies did not participate (although two individual friendly societies attended). At the Memorial Hall Conference, the inaugural address was given by W. C. Steadman, of the TUC Parliamentary Committee. He ridiculed the prevarication of the various official committees of the 1890s, criticised the Poor Law's treatment of the aged (arguing that state pensions would be a more humane alternative) and exposed Joseph Chamberlain's caution. Five motions were debated, which combined together called for a national scheme of old age pensions, non-contributory and funded entirely out of imperial taxation, of at least 5s Od per week, payable from the age of 60.32 The state's response At this point, it is appropriate to examine briefly how the old age pensions debate moved into the portals of government in the 1890s, via the proceedings of several official committees. In essence, these committees explored the different positions on the question of whether or how outdoor relief should be granted to the aged: none at all (the COS); only to the 'deserving' (Local government Board); greatly relaxed - possibly even as of right - to all aged; contributory old age pensions (compulsory or voluntary) supplemented by outdoor relief; finally, all outdoor relief to the aged replaced by universal, non-contributory old age pensions (advocated by Charles Booth and by the socialists - but for very different reasons). The debate in the 1890s was essentially conducted across this spectrum, and was evident in the proceedings of several important official committees of enquiry. The activities of Canon Blackley's National Providence League had been rewarded in 1885 with the appointment of a House of Commons Select Committee on National Provident Insurance under the chairmanship of Sir Herbert Maxwell. Established 'to inquire into the best 31

Ibid., p. 11.

32

Report of the Old Age Pensions Conference, 1902.

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The campaign for old age pensions

system of National Provident Insurance Against Pauperism', this committee examined five suggested schemes, of which most time and attention was devoted to Blackley's. The committee's unsurprising verdict was that many of the poorest class would be unable to save the necessary deposit between the ages of 18 and 21 required by the Blackley scheme. It commented: Among the poorest classes so many exceptions would have to be made in case of both women and men that the scheme would to a great extent fail to benefit many of those who at present add very largely to the pauperism of the country. It would not assist those who are out of work, or compel those who are idle and dissolute to go to work. This was, of course, the classic dilemma of all suggested contributory schemes of the 1880s.33 The quickening of political interest in the 1890s was reflected in the appointment by Gladstone's Liberal government of a Royal Commission under Lord (Henry) Aberdare in 1893. The remit of the Aberdare Commission revealed with perfect clarity how the twin issues of Poor Law reform and old age pensions were interlinked and part of the same problem: its terms of reference were essentially to consider whether outdoor relief should be made easier for the aged to claim (possibly even obtainable as a right), or whether they should be lifted off the Poor Law completely, so that it could henceforth impose a stricter discipline on the able-bodied male. The membership of the Aberdare Commission covered a wide range of opinion, except in one respect: despite the feminisation of poverty in old age, it contained no women. Lord (Lyon) Playfair effectively assumed the chairmanship on Aberdare's illness in December 1894, and became formal chairman on the latter's death on 25 February 1895 the day before the report was due to be signed. (There was some resentment on the part of the bolder spirits on the commission that Playfair had watered down passages drafted by Aberdare which had firmly recommended a state pension scheme.) The Prince of Wales personally requested to serve on the commission, but resigned from it on 19 February 1895 because of the party political implications of its recommendations. Other leading figures on its membership were Joseph Chamberlain, Charles Booth, Henry Broadhurst (of the Trades Union Congress), the veteran agricultural trade union leader Joseph Arch, Charles Stewart Loch (secretary of the Charity Organisation Society) and Charles Ritchie (President of the Local Government Board between 1886 and 1892). There were widespread suspicions that its membership 33

Report from the Select Committee on National Provident Insurance (1887), pp. iii-viii.

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had been deliberately chosen in order to create the maximum of conflict and disagreement.34 Yet it is precisely this conflict of views that makes the Aberdare Report such a fascinating record of the social politics of the 1890s - particularly in its minutes of evidence, where is to be found the real cut-and-thrust of debate. The main report ranged widely over the emerging dilemmas in the Poor Law's treatment of the aged, summarising all the tendentious 'outdoor relief versus pensions' arguments in the income support of the aged poor. Too politically paralysed by the clash of interests of its members, it simply avoided making a bold decision. It felt able to recommend none of the pension proposals put to it, and rather weakly suggested two main courses of action: first, no fundamental alteration of Poor Law practice, but a greater distinction between the 'respectable' aged who became destitute, and those aged whose destitution was brought about by their own misconduct (it declined to elaborate on how this distinction might be drawn) - with higher levels of outdoor relief being paid to the former; second, some development of Post Office annuity schemes. The main report concluded with a blaze of optimism about the growth in the working class of friendly society membership, saving, self-reliance, and so on, but acknowledged the 'widespread expectation' that some provision other than the Poor Law would have to be introduced for those aged poor 'who have led respectable and industrious lives'.35 In effect, the issue had been left for others to pick up. The controversies attendant upon the report's proceedings were reflected in the plethora of minority reports that were published along with the main report. These are impossible to summarise briefly, as they represented different positions on the 'outdoor relief versus pensions' spectrum. Some strongly supported the relaxation of outdoor relief to the 'deserving' aged; some opposed this as creating what C. S. Loch called a 'privileged class who should receive outdoor relief as a kind of right'; Chamberlain, Ritchie, Booth and two others objected to the inadequacy of the report's recommendations; Loch emphatically rejected any state pension scheme, preferring a policy of advice and guidance to the aged poor; and Henry Broadhurst outlined the socialist case for universal non-contributory pensions. The report's minutes of evidence showed that, by the mid-1890s, 34

35

For the background, see Patricia Mary Williams, 'The Development of Old Age Pensions Policy in Great Britain, 1 8 7 8 - 1 9 2 5 ' (University of London (LSE) Ph.D. thesis, 1970), pp. 7 9 - 9 0 . Report of the Royal Commission on the Aged Poor, vol. I, C-7684, 1895, pp. lxxxiii-lxxxvii.

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proponents of the middle way solution of a compulsory insurance-based pension scheme were running into difficulties. Robert Hedley (a Local Government Board inspector) pointed out in his evidence that a compulsory scheme was utterly impractical: 'in a free country', he said, 'where labourers migrate from place to place, and carry no certificate of identification with them, I think it would be extremely difficult'.36 Another witness feared that if the state made any contribution at all to a compulsory insurance scheme, then this would have a detrimental effect on the character of the working class.37 In other words, state-induced thrift was a contradiction in terms. Despite its inconclusive recommendations, the Aberdare Report did point the way to further action. In 1896, a year after its publication, Joseph Chamberlain (then Colonial Secretary) appointed a 'Committee on Old Age Pensions' under Lord Rothschild to investigate possible schemes. Rothschild's eight-strong team of members reflected its particular bias: three were Treasury civil servants and three were staunch friendly society men - Edward Brabrook (Chief Registrar of Friendly Societies), Alfred Chapman (parliamentary agent of the Ancient Order of Foresters) and Alfred Watson (consulting actuary to the Manchester Unity of Oddfellows). This was the first significant appearance of Watson who, as Government Actuary between 1917 and 1936, was to play such an important part in pensions policy-making. The Rothschild Committee's terms of reference required it to examine schemes 'for encouraging the industrial population, by State aid or otherwise, to make provision for old age', and to consider 'their effect in promoting habits of thrift and self-reliance', plus 'their influence on the prosperity of the friendly societies'. The committee considered over one hundred pension schemes submitted to it in evidence, dividing these into four types: (a) compulsory and contributory; (b) universal and non-contributory, but means-tested; (c) encouragement of voluntary insurance; (d) state aid towards only friendly society members. Despite the fact that 96 of the schemes submitted in evidence were non-contributory or compulsory, the committee interpreted its terms of reference as excluding types (a) and (b) above, and as focusing mainly on (c). These last were the only kind it could approve (with only one member dissenting). It maintained that only a small section of the working class really needed a pension in old age; a man who earned 20s Od per week should have no serious difficulty in contributing 2d per week into an existing scheme such as the Post Office deferred annuities 36

37

Royal Commission on the Aged Poor, 1895, C-7684-I, vol. II, Minutes of Evidence, pp. 9 4 - 5 . Testimony of Mr. Allen (Guardian of St Pancras Parish), ibid., p. 150.

The labour movement and the state

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(which would provide 2s 6d per week at the age of 65). Such a perspective might have had some viability a decade earlier, but in the political world of the late 1890s it rendered the Rothschild Committee's proceedings instantly irrelevant. The conclusions of the Rothschild Committee were thus a bitter disappointment to pension campaigners. Conservatives were delighted: gleefully, the Charity Organisation Review commented that the committee's strictly limited scope of enquiry 'reflects credit on the Treasury official who was responsible for drafting it'.39 Among supporters of universal, non-contributory state pensions there were strong suspicions that these terms of reference had been carefully chosen in order to buy time, and that Joseph Chamberlain was being too innocent by half when he expressed disappointment at the committee's conclusions. Such compromise solutions were looking distinctly threadbare by this stage, as the question of old age pensions was being raised in parliament with increasing urgency. (In 1899, eight pensions bills were introduced into the House of Commons.) In response to this pressure (some thought as a means of dampening it down), Joseph Chamberlain appointed a Select Committee under Henry Chaplin (President of the Local Government Board) - its membership including David Lloyd George - to report upon 'the best means of improving the condition of the Aged Deserving Poor' and to investigate the feasibility of the bills presented to parliament. It was unclear whether the real concern of this committee was with the aged poor themselves or with the sanctity of the 1834 deterrent principles, when the report lamented that cases are too often to be found in which poor and aged people, whose conduct and whose whole career has been blameless, industrious, and deserving, find themselvesfromno fault of their own, at the end of a long and meritorious life, with nothing but the workhouse or inadequate out-door relief, as the refuge for their declining years.40 As has been shown, preservation of the sanctity of Poor Law principles was a major concern in the pensions debates of the 1880s and 1890s. Another had been the dilemma between, on the one hand, the 'painful position' and hardship of those deserving aged poor whose only source of maintenance in their declining years was the Poor Law and, on the other hand, the growth of working-class self-help institutions and the slow decline of old age pauperism. The problem, noted the report, was 'how to devise the means of making kindlier and more humane provision 38 39 40

Report of the Committee on Old Age Pensions, C. 8911 (1898), pp. 2, 13. 'Old Age Pensions', Charity Organisation Review, vol. 4 (n.s.), no. 20, Aug. 1898, p. 65. Report from the Select Committee on the Aged Deserving Poor, 1899, p. iv

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for the one class without doing anything to discourage or arrest the laudable efforts of the other'.41 The Chaplin Committee's report recommended a non-contributory pension of no less than 5s Od and no more than 7s Od per week, administered by County Councils (in order to keep the pension distinct from Poor Law relief), with local pension committees supervising claims. The vexatious problem of establishing 'deservingness' was resolved by the attachment of various conditions to be fulfilled by an applicant, which represented the consensus of many witnesses: a pensioner would have to be a British subject, aged 65 years or over, not convicted of an offence without option of a fine in the previous twenty years, not in receipt of Poor Law relief (other than medical relief) in the previous twenty years, not in receipt of income above 10s Od per week and who had 'endeavoured to the best of his ability, by his industry or by the exercise of reasonable providence, to make provision for himself and those immediately dependent upon him'. 42 The penultimate stage in this official interest was the establishment of a small departmental committee chaired by Sir Edward Hamilton (and consisting of Edward Brabrook, Samuel Provis and Noel Humphreys) to examine the practical problems involved in the Chaplin Committee's recommendation. Conducting its own census of a sample of old people, this departmental committee calculated the effect of the eligibility clauses. This was not always easy, as the statistical evidence was sometimes flimsy: in particular, persons imprisoned without option of a fine were not separated out in crime returns, and only an estimate could be made of those that would be excluded. Another problem was that the committee had to rely upon data from the 1891 census for total figures, and these data were inaccurate; up-to-date costings could only have been undertaken after the 1901 census. Again, the effect of the exclusion of those who had received non-medical Poor Law relief was to some extent conjectural; it was thought likely to debar some 27 per cent of persons aged 65 or over in England and Wales, but this was only an estimate. In all, the effect of these exclusions would be to lower the number of pensionable individuals in the United Kingdom from a total of 2,016,000 aged 65+ down to about 655,000 people receiving 5s Od pensions at a total cost of £10,300,000, including administrative costs. 43 Finally, in 1904 a small House of Commons Select Committee 41 43

42 Ibid., p. viii. Ibid., pp. ix-xii. Report of the Departmental Committee on the Aged Deserving Poor, Cd. 67, 1900. The excluded classes were: 741,000 persons with incomes above 10s Od per week; 515,000 paupers; 32,000 aliens, criminals or lunatics; and 72,700 unable to comply with the thrift test; giving a total of 1,360,700 excluded.

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(which included Lloyd George) considered the operation of various eligibility clauses. 44

The Liberal government Thus by the end of the 1890s the case for contributory pensions had effectively collapsed. Considerable obstacles still stood in the way of a tax-funded, universal scheme - notably the Conservative government's unwillingness to contemplate its cost. However, the year 1902 was an optimistic one for the NCOL. In March, the National Conference of Friendly Societies passed a resolution in favour of state pensions. 'After peace - pensions!' was the slogan at the end of the Boer War, with the hope that some of the level of taxation imposed during the war could be retained to pay for pensions. These hopes were dashed, however, when the April 1903 Budget gave a £12,000,000 windfall to the middle and upper classes in the form of a 4d reduction in income tax. Joseph Chamberlain launched his tariff reform campaign shortly afterwards, and though Chamberlain gave some veiled hints that the revenue raised could be used for pensions, tariff reform diverted attention from social reform. (The NCOL also believed that a tariff-funded pension scheme would be a contributory scheme by another name.)45 With the landslide electoral victory of the Liberal Party in 1906, the cause of old age pensions took a quantum leap forward. Fully 59 per cent of Liberal candidates had mentioned the need for pensions in their election addresses, the social reformist 'new Liberalism' was gaining influence within the party, and all twenty-nine Labour MPs were pledged to the programme of the National Committee. Ten members of the National Committee were now MPs, including John Burns (President of the Local Government Board), Thomas Burt, George Barnes, Will Crooks and J. R. Clynes. The chronology of what subsequently happened has been described by a number of historians, and needs only a brief mention here.46 During 1906, increasing pressure was brought to bear upon the Liberal government. Infused with confidence, the labour movement redoubled its efforts. On 27 February 1906, a deputation from the Parliamentary Committee of the TUC visited the new Chancellor of the Exchequer, Herbert Asquith, while the National Committee lobbied MPs. On 14 March, a resolution in favour of pensions was introduced in the House 44 45 46

Report and Special Report from the Select Committee on the Aged Pensioners' Bilk 1904. Gilbert, The Evolution, p. 199. See: Stead, How Old Age Pensions; Williams, 'The Development', chs. 7,8, 9; Gilbert, The Evolution, ch. 4; Hennock, British Social Reform, ch. 9.

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of Commons by the Labour MP James O'Grady, and was passed without a division. Both Asquith and John Burns made sympathetic noises: Asquith declared that 'on the broad grounds of principle' there was 'the strongest and keenest possible desire' on the part of the government to further the object of the resolution, and Burns even said that he supported a universal scheme paying 5s Odfromthe age of 65. However, the National Committee found - as the suffragettes were to find very soon - that Asquith, the consummate parliamentarian, had a clever way with words that made his promises appear to have greater substance than they actually possessed. Two very different interpretations of 'universality' were emerging: that of the National Committee, which meant pensions to all over a certain age; and Asquith's 'categorical' version, whereby numbers would be whittled down by a series of exclusions designed primarily to contain costs. This was very evident as negotiations progressed. On 13 June a National Committee deputation (Thomas Burt, George Barnes and the Liberal MP Leo Chiozza Money) visited Asquith, who gave it a sympathetic hearing while warning of the 'impossible' cost of what the labour movement was seeking. Some £15,000,000 would be needed for pensions at 65, equivalent to 6d on income tax. Thus Asquith supported universality, but 'subject to certain conditions' for exclusion, which he defined as 'non-residence and criminality'. Ominously, he discussed the possibility of a later qualifying age (68 or 70) and an income limit.47 Much the same occurred on 20 November 1906, when a deputation of 150 Labour and Liberal MPs put the case for pensions to the Prime Minister, Sir Henry Campbell-Bannerman, and Asquith. CampbellBannerman said that he 'entirely agreed' with everything the deputation had said, 'and he was only prevented by the limits of time and money from acceding to their requests'. A universal scheme would be 'the only satisfactory method . . . with, of course, certain well-understood exceptions'. A contributory scheme was entirely rejected as involving 'inquisitorial machinery'. The Prime Minister assured the deputation that the matter would be dealt with, 'as soon as time and money permitted'.48 Planning continued within the government, at a relaxed pace, but when the King's speech at the opening of parliament in February 1907 contained no reference to pensions there were vociferous protests from Labour MPs. However, two months later Asquith announced his budget for 1907, and included in it was a cautious promise that a beginning 47

48

N C O L , The Seventh Annual

Report and Balance Sheet, July 1905-July

1906 (n.d.),

pp. 16-17. NCOL, The Eighth Annual Report and Balance Sheet, July 1906-July 1907 (n.d.), p. 8.

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would be made on pensions in the following year. However, only £2,250,000 was to be set aside to 'lay the foundations' of a pension scheme. Given that even the Chaplin Committee's recommended scheme - more limited than labour radicals sought - would have cost £11,000,000, fears were growing that Asquith was orchestrating endless delay. There was considerable Labour annoyance that one-third of the anticipated budget surplus of £3,700,000 was to go to the middle class, in the form of a 3d reduction in income tax.50 Asquith was in charge of the planning of pensions during 1907-8 (assisted by Reginald McKenna, President of the Board of Education), and in November 1907 the scheme was examined by a cabinet committee consisting of Asquith, McKenna, John Burns and, later, Lloyd George. Under Treasury pressure, two significant economies that were now introduced were the raising of the pensionable age to 70, and the lowering of the married couple's pension rate from 10s Od to 7s 6d. The 1908 Old Age Pensions Act On 7 May 1908 Asquith (who became Prime Minister on 7 April) presented the budget for which he had previously been responsible (as Chancellor of the Exchequer). In it, there was a promise of old age pensions, and a bill was soon forthcoming. The Old Age Pensions Bill began its second reading on 15 June 1908, introduced by Lloyd George as the new Chancellor of the Exchequer (who in effect took over from Asquith at the very last stage). As Bentley Gilbert has put it, it was 'the most meagre possible response to the conflicting pressures for old age pensions of the last decade'.51 Lloyd George himself was caught between a recognition of the very limited nature of the proposed pension scheme and an apprehension over the likely escalation of its cost in the future, given that a non-contributory scheme contained no automatic defences against popular pressure to make pensions universal, non-means-tested, payable at 60 and higher in amount. There had been some discussion of a possible contributory scheme, perhaps modelled on Germany's, but nothing came of this.52 Interestingly, at this stage the Treasury opposed even contributory pensions, preferring the option of more generous outdoor relief to the aged.53 In the parliamentary debates, there were many protests from Labour MPs at the bill's 49 51

52 53

50 HofC Deb., 4s, vol. XLXXII, 18 April 1907, col. 1191. Ibid.,pp. 10-12. Bentley B. Gilbert, Lloyd George: a Political Life. The Architect of Change 1863-1912

( 1 9 8 7 ) , p. 3 3 8 . For details, see Hennock, British Social Reform, ch. 9. Pat Thane, 'Non-Contributory Versus Insurance Pensions 1 8 7 8 - 1 9 0 8 ' , in T h a n e

(ed.), The Origins of British Social Policy (1978), p. 98.

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exclusion clauses, but the attitude of the labour movement was that the introduction of a non-contributory scheme was a significant victory and would provide the basis for further expansions.54 By contrast, the Conservative Party's strategy was to overload the bill with improvements by introducing eleven amendments, thus rendering it impossibly expensive. It is clear that the Conservative Party saw its long-term political objective as shifting the funding basis on to contributory insurance: in a famous diary entry for July 1908, Austen Chamberlain recorded that the attitude of senior Conservatives was to accept the bill 'as a temporary bridge to a complete scheme on a contributory basis'.55 In response to these amendments, five aspects of the bill were altered during its passage through parliament: a sliding scale means test was introduced, married couples were awarded the full double pension of 10s Od instead of 7s 6d, the pauper disqualification was limited to two years, paupers in receipt of medical relief only were not to be disqualified, and ten years' membership of a friendly society was accepted as fulfilment of the industry test. Nevertheless, despite these liberalisations, the Old Age Pensions Act which passed into law in 1908 was very limited in coverage. The level of pension was 5s Od per week, subject to a means test: any earnings above £21 per annum caused the pension to be reduced, shilling by shilling on a sliding scale, down to a minimum of Is Od per week; and above earnings of £31 10s Od per annum an applicant failed to qualify. Parliamentary pressure altered the original provision for a single cut-off point of £26 per annum. It is worth pausing briefly to examine the 'exclusion' clauses (relating to age, means, status and character) that made the new pension scheme less than truly universal. On one level, the purpose of these clauses was quite straightforward - to place an upper limit on expenditure. The Treasury had insisted that no more than £7,000,000 per annum should be spent and, in a non-contributory scheme, the only way of containing costs was to make the scheme selective in cover. In the Bill's planning stages, the cabinet committee had discussed long and hard the need to keep the scheme as inexpensive as possible. The committee's conclusions were summarised in a memorandum of 24 March 1908 by the Chancellor of the Exchequer, H. H. Asquith, demonstrating how the various eligibility clauses would whittle down the number of applicants and reduce total expenditure. Asquith warned that any scheme put forward at the moment would have to conform to 'certain very definite 54 55

For an account of Labour's attitude, see Snowden, Autobiography) Sir Austen Chamberlain, Politics From Inside: An Epistolatory

(1936), p. 118.

vol. I, pp. 1 7 4 - 9 3 . Chronicle 1906-1914

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157 £

limitations': it would of necessity be experimental, it must not unduly mortgage the finances of the present and following years' and it must harmonise with any forthcoming reform of the Poor Law. The whole tone of his memorandum was one of Gladstonian caution: the eligibility clauses were to be judged primarily by the criterion of cost containment. Especially interesting, in view of his earlier promises to the NCOL, was Asquith's declaration to his cabinet colleagues that, '"universal" schemes, such as that put forward by Mr Charles Booth, are out of the question'.56 The first economy was a raising of the qualifying age from 65 to 70 years, even though Asquith admitted that 65 had been generally accepted by most pensions campaigners as the appropriate age at which to attack old age poverty. Raising the age of eligibility thus did more than anything else to destroy the effectiveness of the Act as a measure to combat poverty in old age. An income limit of 10s Od per week (as originally proposed) was deemed necessary in order to prevent pensions going to those 'not needing' them. Such a means test would eliminate 36.8 per cent of the 2,116,267 persons in the United Kingdom aged 65+ (i.e., 778,283 persons), and 31.3 per cent of the 1,254,286 aged 70+ (i.e., 393,405 persons). Thus the combination of income limit and qualifying age of 70 instead of 65 drastically reduced the total of 'pensionables' down to a mere 860,881. Nationality was regarded as a logical criterion. Thus aliens were to be excluded, as were their wives. But since naturalisation was comparatively cheap and simple to obtain, it was decided to exclude those who had not been continuously resident in the United Kingdom for twenty years preceding their attaining the age of 70. Much more problematic were those clauses that were designed to exclude applicants of bad character, and hence make the pension scheme as far as possible one for the 'deserving'. The belief in an incorrigible 'residuum' was quite widely held in Edwardian social debates, and although Labour MPs generally objected to the concept, they accepted this condition without much comment, believing that the Act's imperfections could gradually be removed. Persons who had been in receipt of Poor Law relief after 1 January 1908 were disqualified (except in the case of medical relief), as were lunatics in asylums. Also ineligible were those sentenced to prison without option of a fine, even for ten years after the date of their release. A person convicted for drunkenness under the 1890 Inebriates Act could, at the court's discretion, be disqualified for ten years thereafter. Finally, a pension could be 56

Memorandum by H. H. Asquith, 'Old Age Pensions', 24 March 1908, PRO PIN 3/1. Information in the following paragraphs is based upon this source.

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The campaign for old age pensions

denied to anyone who, in the opinion of the pension authorities, was guilty of 'habitual failure to work according to his ability, opportunity, or need, for his own maintenance or that of his legal relatives'. The significance of these eligibility clauses is somewhat ambiguous, and historians have been intrigued by them. Though their primary aim was the rather mundane one of cost containment, they did have a strong symbolic importance, indicating the tension in the Act between family and community support for the elderly. Hence they have been seen as evidence of the 'Victorian, moralistic attitude to the poor' that permeated the Act's intentions and made the pension scheme an essentially residual measure,57 or, on a more subtle level, as indicative of the desire to reinforce by legislative fiat what John Brown has called the 'very powerful but confused set of assumptions and values' pertaining to family responsibilities and moral conduct. 58 The peculiar mixture of these practical and symbolic considerations is well illustrated if one considers the origins and outcomes of the discriminatory clauses. In the first place, such eligibility constraints were broadly in line with what most pension campaigners had previously suggested. A summary of private members' pension bills presented to parliament between 1899 and 1907 shows that many of them contained disqualifications in line with the 1908 Act - mostly stipulating the age of 65, British nationality and evidence of 'industry and reasonable providence'. 59 As has been shown, the discussion in the 1890s had centred on the question of thrift erosion, with both the Aberdare and Rothschild Commissions stressing this concern. The 1899 report of the Chaplin Committee had recommended clauses virtually identical to those in the 1908 Act, and the financial calculations of Sir Edward Hamilton's departmental committee of 1900 had been based upon such exclusions. Finally, the Liberal government paid close attention to the existing schemes in Denmark and New Zealand (introduced in 1891 and 1898 respectively): the latter was particularly draconian, excluding applicants who were aliens, had been imprisoned for a certain term, had deserted their wives and neglected to maintain their children, were above an income limit, possessed property over a certain value or, interestingly, made any attempt to dispose of income or property in order to engineer eligibility.60 Thus the 1908 Act's clauses were not far out of line with 57

58

59 60

D o r e e n Collins, 'The Introduction of Old Age Pensions in Great Britain', Historical Journal, vol. 8, pt. 2 , 1965, p. 2 5 9 . John Brown, 'Social Control and the Modernisation of Social Policy', in T h a n e , The Origins, p. 133. M e m o r a n d u m , 'Old Age Pension Schemes' ( 1 9 0 7 ) , P R O P I N 3/1. T h e 1 9 0 3 - 4 Select Committee had examined in detail the Danish, N e w Zealand and Australian states' schemes.

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contemporary reformist opinion, which argued that such 'good character' clauses were necessary to legitimise the scheme by making it distinct from the Poor Law. The symbolic nature of these clauses is rendered even more apparent by the fact that many of them proved impossible to enforce. This seems to have been realised by the cabinet in advance. For instance, Asquith, in his budget speech of 7 May 1908, said: As to character, I think the less you go into that question, short of actual conviction for crime, the better. All those suggested tests, which look so well on paper, thrift, prudence, good repute, etc., when you put them into a concrete shape, are not only extremely difficult to apply, but in their application produce cases of unwarrantable hardship.61

The 'habitual failure to work and support one's family' clause had been recognised in advance as essentially unenforceable, unless one conducted long and expensive enquiries into each suspect case. It was not expected to debar more than a tiny handful of applicants, and local pensions officials were given no guidance on exactly how to enforce it. 62 Disqualification of criminals promised to be difficult because of the paucity of accurate statistics on convictions by age. The Home Office pointed out that, in the year ended 31 December 1906, there were 622,444 convictions in England and Wales; but these included very minor offences, such as 'driving without a light'. Again, this figure referred to total convictions and included persons convicted more than once. It was thus impossible to ascertain exactly how many individuals this involved. The estimated number of 'habitual criminals at large' was 4,126; but, of these, the proportion aged 65 or over was unknown.63 The way out of this problem was to debar only those found guilty without option of a fine, and hope that this would be acceptable. The oddest clause of all was the one excluding recipients of Poor Law relief, since this defeated the Act's central purpose of lifting the aged out of pauperism (though to an extent this was a logical corollary of the guarantee that pensions would not disenfranchise). The need for economy pulled policy in one direction, the desire to make pensions distinct from Poor Law relief pulled it in another. In the parliamentary debates on the bill, Lloyd George insisted that paupers had to be excluded in order to hold down costs; but this was really only a transfer of expenditure to Boards of Guardians since, on government estimates, the average weekly cost of a pauper aged 65+ was close to the level of the proposed pension - nearly 5s Od for indoor relief and just under 61 62 63

HofCDeb., 4s, vol. C L X X X V I I I , 7 M a y 1908, col. 4 7 0 . Brown, 'Social Control', p. 130. H o m e Office memorandum, 6 Nov. 1 9 0 7 , P R O P I N 3 / 1 .

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3s Od for outdoor relief. (The total cost of Poor Law maintenance of paupers aged 65+ was £3,189,000, and of those aged 70+ it was £2,344,000.) Originally, it had been proposed to exclude all those who had been in receipt of Poor Law relief at any time in the previous twenty years, but this foundered in the face of political opposition and the administrative difficulties of ascertaining such individuals. The number of persons who might be assumed to have had Poor Law relief in the previous twenty years was 541,682 - but despite its apparent final-digit accuracy, the Home Office warned that this figure 'must be regarded a entirely hypothetical'.64 The easier and more politically acceptable option was to exclude those in receipt of relief after 1 January 1908: this removed in theory 368,000 people aged 65+, and in practice 272,000 aged 70+, lowering the cost of the pension scheme considerably. It would have been logical to allow existing paupers to claim pensions, thus lifting them off the Poor Law and making its reform easier. But, paradoxically, it was precisely the overall Poor Law reform strategy that caused Asquith to recommend the opposite. Once again, old age pensions were inextricably part of the wider issue of Poor Law reform. In 1905 there had been appointed the Royal Commission on the Poor Laws and the Relief of Distress - intended at the outset as part of the Local Government Board's 'back to 1834' campaign. The Board hoped that the Royal Commission would produce a report recommending a reimposition of deterrence. Throughout the formulation of the 1908 Old Age Pensions Act, the Royal Commission was hard at work, and its report was expected imminently. Poor Law reform was uppermost in the minds of all participants in the pensions debate. Asquith thus argued that the pension scheme should be temporary, so that it could harmonise with a radical overhaul of the Poor Law. He minuted to his colleagues: 'It appears to us, in view of the forthcoming report of the Poor Law Commission, to be the best plan, for the moment and provisionally, to exclude at any rate all actual paupers from the scheme.' 65 The final irony was that in 1911 political pressure led to these exclusion clauses being substantially moderated. There had been many public protests over them, 66 and as early as April 1910 a bill was introduced by Hayes Fisher and five other MPs to meet these criticisms. 67 Eventually the government gave way and in August 1911 royal 64

65 66

M e m o r a n d u m , 'Replies to Certain Questions on Old Age Pensions', 8 Nov. 1907, P R O PIN 3/1. M e m o r a n d u m by Asquith, 'Old Age Pensions'. 67 See, for example, material in P R O T 137/2. Material in P R O P I N 3/2.

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assent was given to a bill effecting significant amendments. On 31 December 1910 the Poor Law disqualification had lapsed anyway, since parliament had applied it only to that date. Once old age pensions began to be paid, these eligibility clauses created some problems. Age was the first. Civil registration of births in England commenced in 1837, and became compulsory in 1875; in Scotland it commenced, and became compulsory, in 1855; in Ireland, only in 1864. English claimants born after 1 July 1837 could obtain, free of charge, a birth certificate from the General Register Office, but if born before that date they could supply other items as evidence: insurance policies, entries in a family bible, indentures of apprenticeship, and so on. Sources of information were many and varied: for example, the records of the Registrar-General of Shipping and Seamen were used to ascertain the ages of a ship's crew at the time of a particular voyage.68 As is well known, the lack of systematic birth registration caused great problems in Ireland, especially in the west of Ireland where the sum of 10s Od for a married couple made a significant difference to the household economy. Ireland's greater levels of poverty, plus its higher age structure (partly caused by continued emigration of the young) meant that the proportion of pensioners to total population in Ireland was much higher than in England and Wales (4.62 per cent, as against 1.85 per cent), though the proportion of pensioners to the total population aged 70+ was not significantly higher (68.8 per cent, as against 62.4 per cent). 69 Ascertainment of age in rural Ireland involved interviewing priests and other local figures, or even cross-examining claimants on significant events. Applicants had often rehearsed suitable replies: 'I was able to eat a potato out of my hand on the night of the big wind', showed that one had been alive in 1839. 70 The residence qualification originally created anomalies where there was a temporary absence from the United Kingdom; the 1911 relaxations required the claimant only to prove residence for twelve years in the aggregate out of the previous twenty, and there were various disregards (for example, for service abroad for the Crown). Most discontent arose over the means-testing, especially where support by children resulted in a pension being reduced. Likewise, the 1911 Act assumed that savings accrued 5 per cent interest, though many forms of investment (such as the Post Office Savings Bank) only returned 2Vi per 68

69 70

H. J. Hoare, Old Age Pensions: Their Actual Working and Ascertained Results in the United Kingdom (1915), pp. 1 5 - 2 7 . Ibid., p . 168. Appendix to the Report of the Departmental Committee on Old Age Pensions, including Minutes of Evidence, Cmd. 411, 1919, q. 3702.

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cent.71 This 'penalty on thrift' was subsequently to be taken up by the labour movement as the major argument for universal, non-meanstested pensions. Whatever the controversy over these clauses, there is no doubt that old age pensions were very popular with their claimants. The first payments were made on 1 January 1909, and covered roughly 490,000 recipients. By the end of the financial year 1908-9, 647,494 pensions were being paid, to a total value of £8,077,110. By 1912-13, total recipients had risen to 967,921 and cost to £12,315,061, because of the 1911 relaxations. These inexorable rises seemed to confirm the worst fears of the Treasury that an open-ended commitment had been made. Though 'a pension for the very old, the very poor and the very respectable', as Pat Thane has put it,72 the payments had a marked effect on old age poverty. In 1912-13, 93.6 per cent of pensions awarded were for the full amount of 5 s Od - a graphic illustration of the extent of hidden poverty in old age - with women benefiting disproportionately. Touching stories circulated of pensioners' gratitude towards the Post Office clerks who disbursed the payments, some even giving themflowers,fruit and sweets in return. For many years, the old age pension was affectionately known as 'the Lloyd George' in tribute. Undoubtedly, then, the 1908 Old Age Pensions Act emerged as the most popular and least controversial of all the Liberal government's welfare reforms. Such popular acclaim should not blind us to the economically and politically hard-headed motives behind it, nor the serious deficiencies in its coverage. Fixing the eligibility age at 70 rendered the Act a very blunt weapon against old age poverty. Nevertheless, in three important respects the 1908 Old Age Pensions Act was potentially very radical: first, it overwhelmingly benefited women. Although women made up 58.6 per cent of the population aged 70 and over, they constituted fully 62.5 per cent of old age pensioners when the scheme began. In other words, women outnumbered men by nearly 2:1 in the pensioner population - a tribute in part to their greater longevity, but principally to the feminisation of poverty in old age.73 Second, the scheme was tax-funded and thus highly redistributive, in that it targeted the poorest section of the working class. Third, there was no retirement condition. Subject to the sliding scale means test, a pensioner could continue working and still claim the pension. The 1908 Act was thus one of the few examples in modern welfare history of a guaranteed basic income paid regardless of whether or not the applicant 71 73

72 Ibid., q. 5082. Thane, 'Non-Contributory', pp. 103-4. The female:male disproportion was highest in urban areas, and lowest in rural.

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was in work, with a tapering income disregard. In effect, it was a virtual negative income tax scheme.74 Gender blind, redistributive, targeting the poor and awarded to recipients by virtue of their status as citizens rather than as producers, the first old age pension scheme, inadequate though it was, represented social reform as socialists sought it. This radical potential did not go unnoticed within the labour movement. Most socialists saw the Act as only a beginning, and were encouraged by Lloyd George's promises that it was 'incomplete . . . purely the first step'.75 It still remained to lower the age of eligibility and make it truly universal, wrote Frederick Rogers, but he was satisfied that the Act was 'so framed and based that these things will grow naturally out of it, if those who have been a most potent force in causing it to be passed - I mean the Labour Party - continue alert and awake to its future developments.'76 Likewise, at the 1908 TUC Annual Conference, a resolution called for the pensionable age to be lowered to 60, and Ben Tillet commented that 5s Od 'was a wretched sum to give . . . Cabinet Ministers lighted cigars at that price, and they would not think much of a dinner that did not cost more'. Tillet even declared that he wanted pensions paid at the age of 50. 'I am going to use it as a lever for extorting something more', was Philip Snowden's promise.77 Such politically sabre-rattling sentiments seemed to prove correct all the warnings of conservatives that a non-contributory scheme was highly dangerous, in that it contained no automatic defences against 'irresponsible' populist demands. Because of his difficulty in resisting such expansionist demands from backbenchers while the Old Age Pensions Bill was passing through parliament, Lloyd George had become a convert to the contributory insurance principle.78 Most of all, the Treasury was viewing the new pension scheme with the deepest apprehension. Accordingly, from 1908 onwards it began a long campaign to have the funding of the state pension scheme shifted to a contributory insurance basis. 74

75 76

77

78

T h e 1908 Act was one historical example of negative income tax cited by Milton Friedman w h e n the N i x o n administration in the U S A was considering its proposed Family Assistance Plan in 1 9 6 9 - 7 2 . Vincent J. and Vee Burke, Nixon's Good Deed: Welfare Reform (197'4), p. 141. HofCDeb., 4s, vol. C X C I I , 15 June 1908, col. 5 6 5 . N C O L , Tenth and Final Annual Report and Balance Sheet, July 1908-July 1909 (n.d.), p. 8. . Report of the Forty-First Annual Report of the Trades Union Congress, 1908, pp. 1 9 2 - 3 ; H of C Deb., 4s, vol. C X C I I , 9 July 1908, col. 148. Initially, Lloyd George had rather unconvincingly argued that, because the scheme was paid out of public funds, to which all citizens contributed in direct and indirect taxation, it was therefore a 'contributory' scheme. H of C Deb., 4s, vol. C X C , 15 June 1908, col. 5 6 5 .

Part II

Contributory pensions

The First World War and the 1919 Ryland Adkins Committee

The effect of the First World War on pensioners was contradictory. On the one hand, the full employment conditions brought about by a war economy increased the labour force participation of pensioners, and thus some of them experienced a rise in income. At the same time, full employment boosted the political confidence of the labour movement and greatly expanded trade union membership (which roughly doubled in size from 1914 to 1920, from about four million to over eight million). This had an inevitable knock-on effect upon the militancy of pension campaigners (most of whom had roots in organised labour). As we have seen in the previous chapter, the labour movement had always regarded the 1908 Act as 'unfinished business', and was determined to pursue its goal of tax-funded, non-contributory pensions, universal in cover and with no means tests, paid if possible from the age of 60. Thus in early 1916 Asquith, as Prime Minister, received deputations from trade unionists and Labour MPs demanding higher pensions; but he refused their requests on grounds of cost.1 Pressure from the labour movement continued throughout the war, and in 1919 resolutions demanding a pension of £1 per week, payable at the age of 60, were passed at the annual conferences of the Labour Party, the Women's Cooperative Guild and the National Conference of Labour Women. Even more indicative of the renewed militancy was the formation, on 1 July 1916, of the National Conference on Old Age Pensions (NCOAP) to campaign for the removal of the 'thrift disqualification' clauses and, secondarily, a raising of the pension level. Based in organised labour, the NCOAP gathered the support of one hundred MPs under the leadership of Tom Wing, its spokesman in parliament. But despite its claim to represent the interests of over ten million people, the leadership of the NCOAP were steeped in labour aristocrat values; thus, as will be shown, their focusing on the 'penalty on thrift' inherent 1

Patricia Mary Williams, 'The Development of Old Age Pensions Policy in Great Britain, 1878-1925' (University of London (LSE), Ph.D. thesis, 1970), pp. 320-1. 167

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in the 1908 Act's means-testing procedures was to present the Treasury with an issue that could be exploited in a very different way.2 Yet while bringing more employment opportunities for older workers, the war set off rising inflation (particularly of food prices), which seriously eroded the value of the pension and lowered the real levels of the income limits. Between July 1914 and November 1918, the overall cost of living rose by between 120 per cent and 125 per cent, with food prices rising by just over 130 per cent (offset by falling rent levels, owing to the new rent controls).3 By the end of the war, the basic 5s Od pension had fallen to about half its 1908 value. For those pensioners who could not work, therefore, the effects of wartime inflation were serious. Perversely, the improved job opportunities offered by a war economy, plus the effective fall in the means-tested income limits, resulted in an increasing number of pensioners finding themselves ineligible for the pension; hence the number of pensioners, having risen from 647,494 in 1909 to 987,238 in 1915, fell thereafter to 920,198 in 1919 (all figures relating to the last Friday in March).4 As in 1909, women formed roughly 63 per cent of the pensioner population and old age poverty continued in large part to be an exacerbated form of women's poverty generally: in other words, those factors that made women poor for the majority of the life course - lower remuneration at work, fewer job opportunities, irregularity of employment, the demands of motherhood, dependence on a husband's wages and his willingness to share them equitably - prevented them accumulating any appreciable assets, and made them poor in old age. Thus the 1919 pensioner was most likely to be a working-class woman who, having lived a life of frugality and self-denial while bringing up a family, and having outlived her husband, now faced a poverty-stricken old age. To many pension campaigners, applying a test of thrift by legislative fiat on such a citizen seemed an increasingly poor joke. The pressure of public opinion did have some effect. In August 1916 the government made a concession in the form of a system of supplementary allowances of 2s 6d per week to those pensioners on the maximum pension suffering from 'special hardship' owing to rising food prices. (Like many welfare innovations that became permanent, this was initially thought of as a temporary measure for the duration of the war 2

3

4

Andrew Blaikie, "The Emerging Political Power of the Elderly in Britain 1908-1948% Ageing and Society, vol. 10, pt. 1, 1990, pp. 2 2 - 3 . Appendix to the Report of the Departmental Committee on Old Age Pensions, including Minutes of Evidence, Cmd. 411, 1919, q. 8714 (hereafter, Minutes of Evidence). In subsequent passages, question number references are given for the Minutes. Report of the Departmental Committee on Old Age Pensions, Cmd. 410, 1919, p. 18 (hereafter Report).

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only.) A year later, in August 1917, the 'special hardship' condition was removed such that the allowance became, in effect, a 50 per cent addition to the basic pension. In addition, the means tests were relaxed and the limit on earnings raised to a starting point of £1 10s Od. Thus by March 1919, 911,706 additional allowances were being paid, out of the total of 920,198 pensions (£5,997,000 for the former, £11,731,000 for the latter).5 Without really admitting it, the government had raised the value of the pension by half. But this was really only a holding operation, a postponement of the day when the whole future of old age pensions would have to be considered. The increasingly obvious plight of pensioners, and the growing militancy of their supporters, forced Lloyd George's post-war coalition government to consider the issue early in 1919; and thus on 3 April 1919 there was appointed a departmental committee on Old Age Pensions under Sir W. Ryland Adkins, a Liberal MR The committee's membership The Ryland Adkins Committee may have been appointed, as Bentley Gilbert implies, with the intention of producing as anodyne a report as was possible in the circumstances.6 But the collection of witnesses it assembled gave forth such powerful evidence on the abject poverty of pensioners that the committee had to take notice and, in fact, it produced quite a radical majority report. Its membership consisted of three elements. First of all were the civil servants: Sir Henry Robinson (vice-president of the Local Government Board for Ireland), Sir Arthur J. Tedder (ex-Commissioner of Customs and Excise), Sir Alfred Watson (now Government Actuary), Sir Theodore G. Chambers (Controller of the National War Savings Committee), H. J. Comyns (Local Government Board) and Ewan F. Macpherson (legal member of the Local Government Board for Scotland). Of these, it was Sir Alfred Watson who was the torch-bearer for the 'Treasury view' that, in the light of the nation's post-war economic difficulties, there should only be a minimal increase in pension levels. At this point, it is instructive to pause and consider the career of the man who was never elected to any representative office, yet was to play such an important part - arguably, the most important part - in the development of state pensions policy in Britain. Born in 1870 (d. 1936), he was the grandson of Reuben Watson, a consulting actuary with a wide practice advising several friendly societies (the most 5 6

Report, pp. 18-19. Bentley B. Gilbert, British Social Policy, 1914-1939 (1971), p. 237.

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important being the Manchester Unity of Oddfellows) who gave evidence before the Aberdare Commission. On leaving school, the younger Watson entered his grandfather's practice, and in 1893 he passed the final examination as a fellow of the Institute of Actuaries with a first class and the highest mark of his year. At the remarkably young age of 26, Alfred Watson was appointed to the Treasury-dominated 1896-8 Rothschild Committee (which, as we have seen, pronounced such a negative verdict on state pension proposals). On that committee, his youth did not prevent him from interrogating witnesses in an aggressive and combative style. Likewise, in the proceedings of the Ryland Adkins Committee, Watson showed little mercy with witnesses (such as Longstaff Dennison of the NCOAP) who turned up with illprepared and sloppy evidence. He published several important papers on friendly society finance in the 1900s (including the key 1903 paper analysing the 'sickness experience' within the Manchester Unity), and became acknowledged as the leading expert on the subject. Because of this, he was appointed chief actuary to the National Health Insurance Joint Committee in 1912 (giving up a lucrative actuarial consultancy). As Government Actuary from 1917, Watson advised governments of the day on a large variety of matters. With the expansion of state National Insurance, Watson's influence increased greatly, and he made sure that his office played a key role in all social policy-making in general, and pensions policy in particular. As his obituary records, his competence and judgement became so respected within Whitehall that his advice was sought even on matters well outside the province of Government Actuary; no doubt another factor was that Watson's cool actuarial advice could be used to outmanoeuvre the extreme demands of socialists in the heady days of 1918-24. After the Ryland Adkins Committee, Watson chaired the enormously important Inter-Departmental Committee on Health and Unemployment Insurance between 1922 and 1923 (discussed fully in the next chapter), and served on numerous other key Government committees. Within the Whitehall bureaucracy, he was the driving force behind the move to contributory pensions in 1925, and in the inter-war years no social policy proposal could become law without the imprimatur of the Government Actuary's office.7 As the civil servant W. J. Braithwaite recorded, with unconscious irony, 'the country has never recognised what a great public servant they had in Watson'.8 In short, the senior civil servant with the greatest responsi7

8

'Memoir of Sir Alfred Watson', Journal of the Institute ofActuaries, vol. 68, pt. 1, no. 320, 1936, pp. 1-7. H. N. Bunbury (ed.), Lloyd George's Ambulance Wagon. Being the Memoirs of William J. Braithwaite 1911-1912 (1957), p. 204.

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bility for the state old age pension scheme was a determined opponent of tax-funded, non-contributory universal pensions. The second group consisted of MPs from all parties, most of whom proved very sympathetic to the mass of evidence behind the pensioners' case: Lt. Col. Nathan Raw, Joseph Devlin, Major J. G. Jameson, Arnold Rowntree (MP for York between 1910 and 1918), G. R. Thorne and Stephen Walsh (both Labour). Of these, it was Rowntree who figured most prominently in the evidence-taking (on several occasions acting as chairman), and Devlin and Walsh who stood out for a radical increase in the pension level. Finally, there was a third group of members, made up of those with friendly society connections, who could be relied upon to provide conservative ballast - W. A. Appleton (secretary of the General Federation of Trades Unions) and J. H. Dunford (High Chief Ranger of the Ancient Order of Foresters) - or those with direct experience of dealing with pensioners: Mrs H. Jennie Baker, Miss M. Cecile Matheson and Henry Woodall. Whether or not she actually conceived of the idea, Miss Matheson played a large part in the organising of an appearance before the committee of two women pensioners aged in their early 70s whose evidence was a devastating revelation of old age poverty. The proceedings of the committee If the government hoped that political loyalty, Treasury orthodoxy and friendly society self-interest would produce innocuous, do-nothing conclusions then they were to be very disappointed. The evidence presented to the committee by fifty-six witnesses over twenty-seven working days between 29 April and 24 September ran to nearly half a million words and stands as eloquent and often tragic testimony to the plight of Britain's aged population. Read over seven decades later, the statements of the witnesses practically leap from the page and reveal the human stories behind the managerial and technocratic problems of social administration. The first and overwhelmingly most important issue dealt with by the committee was the effect of means testing. In 1919, 62 per cent of the population aged 70 and over were receiving pensions, and 38 per cent were not. It was impossible to tell exactly how many of this 38 per cent were excluded by the capricious decisions of pension officers, but the statistics showed clearly that most of those who applied for a pension and found themselves disqualified from receiving one were disqualified on account of means - that is, income from interest on savings, employment, friendly society benefits, occupational pensions or gifts from

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friends and relatives. Out of the total of 920,198 pensioners in the UK, 142,084 were new claims made in the year ending 31 March 1919. Of these, 31,218 were questioned by pensions officers, of which 17,542 were disallowed. Thus roughly 12 per cent of all new claims were disallowed. But, at the same time, disqualifications were being made against pensioners of longer standing: in the year ending 31 March 1919, a total of 48,766 pensioners were disqualified (out of new and old claims). The majority of these (25,142) were on account of means; the next category (11,244) because of receipt of Poor Law relief; then age (10,281); and,finally,'other causes' (l,099). 9 The problem of means testing was then, as now, the principal dilemma of a non-contributory, tax-funded selective scheme targeted at the most needy. The Treasury's view was that, unless it were to be a prohibitively expensive universal scheme, an income limit had to apply, and means had to be assessed. But this seemed to penalise those very civic virtues of personal thrift, economic independence and family support that the Act was ostensibly trying to uphold. The 'penalty on thrift' seemed to punish a pensioner, by a reduction in the pension, for income that derived from having saved over his or her lifetime. Any form of assistance in cash or kind from sons and daughters could be regarded as income: for example, the occasional meal from one's children would be allowed, but if a pensioner was regularly looked after in this way such filial generosity could lead to a reduction in the pension. If a pensioner kept a garden to grow vegetables, the income from this would be taken into account. Furniture over the value of £50, or even a sackful of money stuffed in a mattress, if admitted to a pension officer, would be assessed as earning interest at 5 per cent. Designed to reward virtue, the 1908 Act seemed to be encouraging evasion and falsehood. Most pension officers took great pains to ensure that pensioners received their due. cWe leave no stone unturned to see that he gets the pension', said one: . . . 'If we think a person is entitled to a pension we use everything in our power to see that he or she gets the pension.'10 But officers struggled with the inherent problems involved in applying standard rules to an enormous variety of human situations. This was compounded by the regional and cultural diversity of British society at the time. Quite simply, pension officers often lacked the necessary information with which to decide marginal cases of eligibility, especially on grounds of age and means. The committee heard of cases where eligibility was engineered by dishonesty, but these were vastly outnumbered by instances of real 9

Report, p. 18.

10

Minutes of Evidence, qs. 513, 515.

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hardship, where the kindness of children, friends or neighbours would, in effect, be penalised. Numerous cases of unfairness were put to the committee. The standard injustice voiced by many witnesses was the apparent situation where people might lead a life of Smilesian frugality, saving all their lives, and then find themselves ineligible for a pension; whereas other people could lead a veritable rake's progress of a life, reaching the age of 70 in a penniless state, only to find themselves rewarded by the weekly grant of 7s 6d of taxpayer's money. Here working-class culture collided head-on with administrative regulation. As has been shown in the last chapter, labour leaders had always disliked having to adjudicate between the 'thrifty' and the 'thriftless' and had thus supported universal pensions; but meanstesting had found its way into the 1908 Act as one of several devices introduced to constrain cost. However, the thrift disqualification contrasted sharply with the other exclusion clauses (for example, debarring criminals) which were designed to reward only 'good citizenship', and hence legitimise the new scheme. Thrift was of enormous symbolic importance in the British working class, particularly among its articulate skilled elite who tended to provide the leadership of organised labour. It accorded with powerful internalised self-definitions of respectability and civic virtue. Thrift was 'the poor man's sword of honour', as the NCOAPputit. 1 1 But concentrating on the thrift issue produced a confused moral outrage that was easy to deflate. This was particularly evident in the appearance before the committee of J. Longstaff Dennison, the NCOAP's secretary. Dennison's style clearly irritated many committee members, particularly his use of terms like 'despicable' to describe the treatment meted out to pensioners who had their applications disqualified. It smacked of naked friendly society self-interest when he declared that the most important priority was to allow income from friendly societies, trade unions and superannuation funds to be disregarded as income in any means-testing, with the next most important being the reduction of the age limit, and only finally a raising of the pension level.12 He fell foul of the committee's questioning on a number of embarrassing issues: they discovered errors in the written evidence he had submitted on behalf of the NCOAP, demonstrating to him that these were very rare cases of maladministration by pension officers, rather than defects in the Act itself. Especially mortifying was the committee's crucifixion of Dennison over his erroneous claim that 11 12

Quoted in Blaikie, 'Emerging', p. 26. Minutes of Evidence, qs. 993, 1042, 1053.

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deaths among pensioners had risen from 63,852 in 1910 to 118,730 in 1916 because of the fall in the real value of the pension. 13 Representing a particularly vulnerable and poverty-stricken group in society - and voicing their demands through the moral invective of the male friendly society leader - the NCOAP's concentration on the thrift issue produced the kind of emotional indignation that could easily be torn apart in the clinical surroundings of a government committee. The problem was not that Dennison's moral outrage was based on a few selective cases of injustice, albeit keenly felt: it was that the average working-class life could not be judged in such black-and-white simplicity. The ability to save for one's old age was most definitely not a reflection of one's propensity to thrift and good citizenship. As Charles Booth had argued in the 1890s, any number of accidents and misfortunes could occur during the life course to condemn one to an impoverished old age. This was especially so given that, by a ratio of two to one, women outnumbered men in the pensioner population: a working-class woman who devoted her life to bringing up children was at the mercy of her husband's wages and his conditions of employment, over which she had precious little control. Her economic status in old age would reflect these external factors, and it was thus an irrelevance to assess her own 'thriftiness'. Hence one witness, Samuel Andrew Pinkerton (a Surveyor of Customs and Excise, and formerly a pension officer) felt that the pension had little effect on thrift, since there were so many other factors involved: An old woman, for instance, has been very thrifty, but she has no money. She has spent it perhaps in educating her children who may have died. She is a thrifty person although apparently she has not been thrifty. She has probably been more thrifty than a person who did not educate her children, but put them out to work and lived on their earnings and saved £20. 1 4

One committee member who grasped this point was Sir Alfred Watson. He argued that one person might have saved nothing over a lifetime because of accident, generosity or bad luck (a large family, illness, the maintenance of relatives, and so on), whereas another person might have been able to accumulate savings simply through the good fortune of not being so burdened, or through sheer meanness of character.15 Watson was primarily motivated by fiscal parsimony: in the absence of a contributory scheme (which he would have liked), he wanted to preserve means-testing as a strong line of defence against demands for a universal pension of as much as £1 a week, as voiced by many in the labour 13 14

Ibid., qs. 1062-83, 1085-92, 1215-29, 1302-19. 15 Ibid., q. 3359. Ibid., qs. 3151-9.

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movement. Paradoxically, therefore, he presented such arguments to show that the case of groups like the NCOAP was weak: its call to remove the 'penalty on thrift' assumed that thrift could be rewarded, whereas Watson - with true civil service scepticism - realised that the means-testing had not been designed as a moral weapon. It was merely a Treasury device to keep down costs and target the really needy.16 In short, it was clear from the evidence presented to the Ryland Adkins Committee that the means-testing and other disqualification clauses were rapidly losing their symbolic and legitimating value. Indeed, they were bringing the pension system into disrepute, providing a rallying-point for the powerful, if confused, activism of groups like the NCOAP. By 1919, the only justification for these clauses was the one stressed by Asquith in 1908 - financial. But with the pension having fallen so low in value, and a newly confident labour movement demanding universal pensions, those financial constraints were proving harder and harder to justify. Nearly every witness agreed that 7s 6d was inadequate, and that it should be substantially raised; some even wanted £1 a week. Few witnesses were prepared to support a contributory scheme. Some suggested 65 or even 60 as the qualifying age, and in this they were supported by a marked degree of consensus among witnesses that individuals should be able to retire somewhere between 60 and 70 if they so chose. It was around that age, said Alderman Peter Phythian (chairman of the St Helens Pension Committee) that, in St Helens, a working man was 'usually a finished man. He is usually done . . . He cannot get employment by any means. Prior to the war it was practically a by-word in St Helens that a man was too old when he got to 55. We had a great many people out of work.' Similarly, John Errington, of the Northumberland and Durham Miners' Permanent Relief Society, testified that the average age of retirement of a miner in his area was 56 to 66 years; the age of eligibility for the pension should thus be no higher than 65. The TUC representatives thought that after the age of 60 years, the majority of workers were 'worn-out'; they found to their cost that 'their commercial value becomes very low'.17 It is important to remember that labour representatives did not want retirement forced upon workers against their will, since they recognised that there was much variation in the ageing process from individual to individual. Many workers clearly felt that they were at the mercy of their employers, who would dismiss them when they became incapable of work - sometimes justifying this by a medical examination.18 While this 16 18

Ibid., qs. 1560-1. Ibid., qs. 2625-7.

17

Ibid., qs. 2623-4, qs. 5244-58, q. 3016.

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was less true in the old-style family firm, which would tend to adopt an attitude of paternalistic responsibility towards its older workers, transferring them to lighter work when they reached their 60s, it seemed to have become the case in large units of employment, with a more impersonal employer/worker relationship and confrontational industrial relations. In the North Western Railway, for example, there was a pension scheme providing benefits at the age of 65, which meant that for most workers retirement at this age was compulsory, especially 'where it is desirable in the interests of the good management of the railways'. Interestingly, what determined whether or not a man would be retired was not only managerial considerations but 'the man's condition of health. As a matter of fact, if it is thought that they can afford to go they are generally retired.' The company pension made this decision easier by facilitating the shedding of older workers who were more prone to illhealth: 'it helps to maintain the staff in better condition and gives opportunity for promotion for the younger ones'.19 Thus the desire to secure adequate pensions, without means tests or enforced retirement, led the labour movement to call for universal pensions of £1 per week. Several witnesses before the Ryland Adkins Committee from labour organisations (such as William Marlow, secretary of the National Conference of Friendly Societies, G. H. Stuart Bunning of the TUC, or Airs E. M. Lowe of the Standing Joint Committee of the Industrial Women's Organisations) combined all the above demands together and asked for universal pensions of £1 per week payable at the age of 60 - which would have cost around £214,000,000, as against the existing scheme's £17,728,000. Even at 10s Od per week, universal pensions at the age of 70 would cost £41,000,000; paid at the age of 65, they would cost £70,000,000; and paid at the age of 60, they would cost about £107,000,00020 (estimates varied slightly). Within the committee, as has been shown, Sir Alfred Watson was doing his best to pour cold water on such grandiose proposals. However, Watson's fiscal caution came a poor second best to the overwhelming evidence of poverty among pensioners. Some sample pensioner budgets were laid before the committee: these showed rents to be about 2s 6d per week (one-third of the pension plus allowance), and the main items of food expenditure to be bread (around 9d, for one loaf per week), margarine (6d to Is Od), eggs, tea, sugar and potatoes. As expected, those pensioners who had other sources of income, and thus lived above 19

Ibid., qs. 3791-4.

20

Ibid., qs. 9064-7.

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the 7s 6d per week level, were much better able to include meat, fish and tinned milk in their diets.21 But far more telling than this rather unsystematic empirical evidence was the appearance before the committee of two pensioners from Birmingham. Appropriately enough, both were female. Mrs Caroline Thompson, aged 73, lived on 9s 6d per week (7s 6d pension, plus 2s Od from a charitable settlement). After payment of rent (3s Od per week for an unfurnished room), light, fuel and laundry (since she was unable to do her own washing), she had precious little left to spend on food mainly bread and butter, a little bacon, sugar, tea, tinned milk, jam sometimes and potatoes once a week. She made one 9d loaf last a week ('it gets very stale towards the end of the week') and never had fresh milk. Throughout her life, Mrs Thompson had been a model of thrift and self-denial, and yet had ended up in poverty. She had had to nurse an invalid husband for fourteen years until he died, keeping both of them on a total income of 1 Is Od per week. For fifty-three years she had been loyal to one job - splitting pen nibs in a factory, at wages of 9s Od per week - maintaining her dignity throughout. ('I did not want my masters to know that I was so poor. I did not go about in disgrace. They had no idea.5) Even in the desperate poverty of old age, she maintained a staunch pride, dressing neatly in charity-provided clothes ('of course, it is not the latest fashion', she commented rather wistfully), and refusing to apply for Poor Law relief.22 The other pensioner witness was Mrs Elizabeth Lorton, aged 72 and a widow for thirty-one years. She fared slightly better, having the 7s 6d pension, 2s Od per week from a lodger, and occasional earnings from the rather unpleasant work of nursing female suicide cases for the local police at 2Vid per hour. She was marginally better off than Mrs Thompson: she ate more meat and could afford to eat 9d worth of bread in two days, whereas Mrs Thompson made such an amount last a week. But Mrs Lorton's diet was still heavily based round small amounts of basic foodstuffs - tea, bread and butter, eggs (only three a week), stewed rice and condensed milk. She testified that price rises had made it much more difficult to live on 8s Od or 9s Od compared with before the war, and that her health was adversely affected by lack of food. 23 By the end of the committee's evidence-taking, therefore, there was little doubt that a substantial rise in the level of the pension was inevitable. But this could only be financially and politically acceptable if firm constraints were still placed on the scheme. Otherwise there would 21

Ibid.3pp. 224-5.

22

Ibid.,pp. 216-20.

23

Ibid.,pp. 220-3.

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be no line of defence against the demands for a universal scheme at the age of 60. Three alternatives were possible: to limit eligibility to those who did not pay income tax; to keep the present structure, raise the pension slightly and lift the means-testing income limits just enough to fend off political pressure; or to keep the 1908 scheme, but supplement it by a contributory pension system in some way. Treasury pressure began to push policy towards this third option. The recommendations of the Ryland Adkins Committee were split roughly along these lines. A majority report signed by Adkins, Chambers, Baker, Devlin, Dunford, Matheson, Rowntree, Thorne, Walsh, Woodall and - in absentia - Appleton, subject to some notes of reservation, called for a pension of 10s Od per week with no means qualification - in effect, a universal pension - 'for all citizens at the age of 70', pending the possibility of a contributory scheme at a lower age. The majority report pointed out that the means limit would have to be doubled to compensate for the rise in prices; but because of the arguments against the 'penalty on thrift' voiced by many witnesses, their recommendation was to abolish means-testing altogether. Outdoor relief should cease to be a disqualification, though indoor relief would remain as one; relaxations were introduced into the entitlements of aliens, non-residents and criminals; and the largely inoperable 'failure to work' disqualification was to be abolished. Interestingly, a note of reservation by Baker, Devlin and Walsh called for a pension of £1 a week eventually, with 15s Od immediately, payable at age 65; while Rowntree and Thorne maintained that, to reflect the rise in the cost of living, the pension should be 12s 6d.24 A minority report signed by the economic conservatives (Robinson, Tedder, Watson, Macpherson, Raw, Comyns and Jameson) warned that the nation was 'labouring under enormous financial difficulties'. They thus rejected a universal pension, merely suggesting a doubling of the income limits and a 10s Od pension - though Nathan Raw wanted it to be 12s 6d a week. It is likely that some of the seven minority members probably the civil servants, led by Watson - saw the only way out of the pensions conundrum in the long term as a contributory scheme, for although recommending the retention of income limits they simultaneously argued that means-testing caused a disproportionate amount of resentment.25 In doing this, they were cleverly turning round the arguments of their opponents, and preparing the ground for the future. The Ryland Adkins Report was signed on 7 November 1919, and published five days later, coming before the cabinet on 8 December. 24

Ibid.3pp. 10-14.

25

Ibid.3pp. 15-17.

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Despite the fact that it proposed that public expenditure on pensions be more than doubled, to £41,000,000, it was considered with the utmost urgency. Though its fiscal implications were anathema to most of the cabinet, in the atmosphere of post-war political nervousness it was considered fatal not to accede in some measure to labour's demands. The principal problem was how to get legislation passed by the notoriously conservative House of Commons of 'hard-faced men' that had entered at the 1918 general election, and in time to give pensioners an immediate increase. This was achieved by the extraordinary tactic of forcing a bill through by suspending the rules of procedure in the House, and virtually prohibiting any debate; Lloyd George even made a personal appearance as a sweetener to disgruntled MPs who complained that they could not get hold of a copy of the bill from the vote office, and were thereby being asked to approve a measure without having seen it. Thus on 19 December 1919 an Old Age Pensions Amending Bill went through all stages of Commons approval in only one and a half hours. In a speech riddled with apologies, the Leader of the House, Andrew Bonar Law, constantly referred to the nation's economic difficulties but used every conceivable argument to win over MPs to the case for higher pensions, including the assurance that 'if we succeed in passing this Bill, it will have a quieting effect on the general unrest which exists in the country'.26 By the 1919 Act the pension was raised to 10s Od per week, and the income limits lifted to between £26 5s Od and £49 8s Od per annum nothing like the doubling that the majority and minority reports had demanded. This, it was estimated, would include some 220,000 pensioners hitherto excluded. Outdoor relief would not disqualify, nor would treatment in a Poor Law infirmary for three months in any one year. Other relaxations broadly followed the Ryland Adkins Report, including the abolition of the 'habitual failure to work' clause.27 The proceedings of the Ryland Adkins Committee had dragged the economic and social circumstances of pensioners out into the open, and laid them bare for public scrutiny. Never again would the Treasury allow such an expensive item of social expenditure to be discussed so openly, with such a parade of highly vocal witnesses demanding higher pensions. It was very noticeable that all the MPs on the committee had been very sympathetic to the pensioners' cause. Virtual mass democracy had just arrived in Britain, and within Whitehall there were great fears that this would engender what one Treasury official was later to call a 'panem et 26 27

HofCDeb., 5s, vol. CXXIII, 19 Dec. 1919, cols. 8 6 5 - 8 . Ibid., cols. 8 8 5 - 6 .

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circenses' tendency in politicians to outbid each other with vote-catching promises of expensive social reforms. Henceforth, the senior civil service would do everything they could to 'take pensions out of polities'. Their chosen weapon was to be the contributory principle.

8

From ' all-in5 insurance to contributory pensions

The background The work of the Ryland Adkins Committee and the 1919 Old Age Pensions Amending Act did not in any way defuse what Bentley Gilbert has called the 'unexploded bomb' of the pensions issue.1 For in the early 1920s the question of support for the aged became tied in with much broader and politically controversial questions about the entire income maintenance system. In fact, the period 1920-4 was one of extraordinary political and civil service activity, directed at a radical overhaul of the social insurance foundations that had been laid in 1911. This, the 'all-in5 insurance planning, aimed at the amalgamation of health and unemployment insurance into one scheme (with a single stamp and card), reform of workmen's compensation, expansion of pensions coverage (to include widows and orphans) via a new contributory scheme and - most radical of all - the introduction of a new public assistance safety-net to occupy that problematic gap between unemployment insurance and the Poor Law. The fact that few of these plans actually materialised should not in any way detract from the enormous importance of the 'all-in' insurance planning. Potentially, it was one of the most important periods of social policy reform in the twentieth century. With a unique insider's perspective - based on familiarity with the subject matter but also, no doubt, on Whitehall folklore - the ex-civil servant Sir John Walley convincingly argued that the principal 'all-in' insurance body, the 1923-4 Anderson Committee, was far more high-powered in calibre and radical in intent than the Beveridge Committee of twenty years later.2 But 'all-in' insurance foundered on that very rock it was designed to surmount mass unemployment - and only the plan for pensions survived. None1 2

Bentley B. Gilbert, British Social Policy, 1914-39 (1971), p. 238. Sir John Walley, Social Security: Another British Failure? (1972), Ch. 6 and p. 72. Walley gives a very useful account of the rather complicated chronology of the Anderson Committee.

181

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theless, it gave the Treasury the ideal opportunity to effect the first crucial shift in pension funding away from taxation, and towards a contributory insurance basis. In the history of state pensions, the 1925 Widows', Orphans' and Old Age Contributory Pensions Act thus stands as a crucial mid-point between the 1908 and 1946 Acts. And, as will be shown, it served a vital political and economic function in deflecting socialist demands for something much larger and more expensive. The move to contributory pensions came about because of the convergence of several factors that produced the broader 'all-in' insurance activity. First of all, there were relatively mundane technocratic and managerial reasons behind this renewal of interest. Owing to the piecemeal way in which they had developed, there were many anomalies in the administration of Britain's early social security policies. Workmen's compensation was run by insurance companies, employers' mutual insurance companies and establishment funds; unemployment insurance by employment exchanges, trade unions and other industrial associations; health and maternity insurance by approved societies; burial insurance by insurance companies, collecting societies, friendly societies and the Post Office; and, of course, old age pensions by the Customs and Excise Department, payments being made through the Post Office.3 For reasons of political expediency or administrative convenience, many of these policies had been introduced with the caveat that they would soon be improved; the need for a thorough administrative overhaul had been recognised by social security experts ever since 1911. There was also strong pressure within Whitehall from the Ministry of Labour, which was pondering the possibility of a new assistance scheme similar to that which appeared a decade later as the Unemployment Assistance Board, and was investigating other alternatives, such as 'insurance by industry'. But this administrative overhaul was not directed at managerial tidiness merely for its own sake. Reform of the whole income maintenance structure took on a sudden urgency in post-war Britain as exservicemen returned from the trenches to look for work. These fears of the revolutionary potential of the ex-servicemen have been well documented by a number of writers4 and, although perhaps somewhat exaggerated for reasons of self-aggrandisement by the Home Office's Director of Intelligence and spy supremo, Basil Thomson, they nevertheless dominated cabinet discussions of unemployment insurance in the immediate post-war period.5 3 4 5

J. L. Cohen, Social Insurance Unified (1924), p. 46. For example, Gilbert, British Social Policy, ch. 2. See, for example, Cabinet 53(20), 30 Sept. 1920, PRO CAB 23/22.

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Once these immediate fears had receded, reorganisation of social insurance became a popular political topic. With the break-up of the Lloyd George coalition government in October 1922, British politics reverted to fierce inter-party rivalry - made all the more intense by the situation, peculiar to the early 1920s, and never to be repeated, whereby all three parties were virtually neck and neck in electoral terms, particularly in their respective shares of the total vote. 'The question is what is going to happen now', mused Neville Chamberlain apprehensively, as he surveyed the inconclusive result of the 1923 general election,6 which gave the Conservatives 38.1 per cent of the total vote, Labour 30.5 per cent and the Liberals 29.6 per cent. The 1918 Representation of the People Act had increased the electorate from 7,700,000 in 1910 to 21,400,000 in 1918, which meant that there was a large body of new voters to be wooed. Social reform thus became a lively political issue.7 The steady rise of the Labour Party (as yet untried in full governmental office, and thus to be feared), growing trade union membership and the example of the 1917 Russian Revolution all gave an edge to the labour movement's demands for much more generous social security payments. Until the experience of minority office in 1924 clipped their radical wings, Labour spokesmen demanded 'work or full maintenance' (at trade union rates) for the unemployed. By 1920-1 Labour spokesmen were demanding benefits in the region of £2 for a householder, 25s Od per week for single men and women, and additional allowances for children - as against the existing unemployment benefit rates of 18s Od per week for men and 15s Od per week for women.8 An important part of Labour's proposed very radical social security package was pensions for widows. Labour had a long-standing interest in the welfare of widows: this had been one of the Independent Labour Party's early demands, and recurred in a variety of forms, such as the Women's Co-operative Guild's idea of 'a minimum for the family'. By the early 1920s a group of Labour MPs (led by Rhys Davies) was regularly demanding widows' pensions funded out of taxation: on 20 February 1924, for example, the House of Commons passed a motion introduced by the Labour MP, Charles Dukes, favouring the principle of pensions 'to all widows with children, or mothers whose family 6 7 8

Political Diary, 9 Dec. 1923, Neville Chamberlain Papers, NC 2/21, University of Birmingham Library. Cohen, Social Insurance, pp. 11 — 13. See, for example, resolution moved by J. R. Clynes, HofC Deb., 5s, vol. CXXXVIII, 24 Feb. 1921, cols. 1198-1203.

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breadwinner has become incapacitated, such pensions to be provided by the state and administered by a committee of the municipal or county council wholly unconnected with the Poor Law'.9 Much of the subsequent policy 'innovation' that came from nonLabour sources in the 1920s was thus an urgent reaction to socialist demands and intended to divert the tide of such demands into safer waters. In one of those periodic, almost intuitive fits of self-scrutiny and ideological reorientation that has enabled it to thrive in the twentieth century, the Conservative Party took the lead. Prominent figures in it began to piece together a strategy of anti-socialist reformism that would win over the middle ground of voters. It was not enough merely to construct an anti-socialist bloc, as Lloyd George had done between 1918 and 1922 - with disastrous results for his own party. For new life to be breathed into conservatism, an especial kind of social policy had to be formulated that would be both electorally appealing and based on the economic and moral virtues of contributory insurance. This ideological reconstruction was to come to fruition in 1924-9 as the 'New Conservatism', personified by Neville Chamberlain's extraordinarily energetic tenure at the Ministry of Health and, in the case of old age pensions, with Stanley Baldwin and Winston Churchill providing crucial support. 'Unless we leave our mark as social reformers, the country will take it out of us hereafter', warned Chamberlain,10 and throughout 1923-4 Baldwin was acutely conscious that social reform had to figure prominently on the Conservatives' agenda.11 In October 1923, for example, he stated: In my view the time is coming when we ought to aim at linking up, guided by the experience of past years, all these benefits of old age pensions and national health and unemployment insurance to see whether it is not possible to devise a more comprehensive, a more watertight, a more beneficial scheme for the people of this country than exists today.12 Again, after the 1923 general election Baldwin rallied his parliamentary troops in the famous Hotel Cecil speech of 11 February 1924, defining the 'New Conservatism' and warning his fellow MPs: 'You are not going to beat Labour on a policy of tranquillity, negation or sitting still. There is a vitality in Labour at present in the country, and unless we can share a vitality of that kind we shall be unable to conquer.'13 9 10 11 12 13

HofC Deb., 5s, vol. CLXIX, 20 Feb. 1924, cols. 1884-1925. Quoted in Iain Macleod, Neville Chamberlain (1961), p. 109. Keith Middlemas and John Barnes, Baldwin (1969), p. 284. Quoted in Cohen, Social Insurance, pp. 11-12. Quoted in John Ramsden, The Age of Balfour and Baldwin 1902-1940 (1978), p. 188.

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Social insurance was to be the medium through which these welfare expansions in the name of political 'vitality' were to take place: unlike tax-funded welfare, social insurance was minimally redistributive and thus accorded with traditional Conservative notions of sound finance; it also had strong moral connotations, in that it could be portrayed as state-encouraged saving. State social insurance had the same broad ethos as the private insurance industry, and would inculcate similar values in its recipients. Cleverly, leading Conservatives had taken the rhetoric on 'thrift disqualification' voiced by pensioners' groups such as the NCOAP, and used it to political advantage. Abolishing means-testing was also attractive in that it would assist the private pensions industry: henceforth, a private pension could be enjoyed alongside a state one. Hence the Conservatives' 1923 general election manifesto announced that 'the encouragement of thrift and independence must be the underlying principle of all our social reforms', and in his election address of the following year Baldwin declared that the aim of 'all-in' insurance was 'to get rid of inquisitorial inquiries and encourage thrift'.14 Planning within Whitehall This convergence of administrative and political impulses led to a flurry of activity within Whitehall. The Ministry of Labour had been examining insurance by industry since at least 1918, and had initially rejected it on the obvious grounds that it would go against the cardinal insurance principle that risks should be pooled: in practical terms, the state scheme would be greatly weakened if too many prosperous industries seceded and formed their own schemes.15 Various technical difficulties might arise, such as how to define a skilled worker (for example, an engineer) who might move between different trades.16 By 1923 the balance of these arguments had condemned insurance by industry to the policy sidelines - as the MP Sir John Marriott put it, 'there is a great deal to be said for it, although I am afraid there is still more to be said against it'17 - and interest was focusing on the much more radical idea of 'all-in' insurance. Essentially, this involved the amalgamation of health and unemployment insurance into a single scheme (with one stamp from employees), on to which would be tacked 14

15 16

17

Quoted in Andrew Blaikie, 'The Emerging Political Power of the Elderly in Britain 1908-1948', Ageing and Society, vol. 10, pt. 1, 1990, p. 26. 'Memorandum by the Ministry of Labour', May 1918, PRO PIN 3/8. Report on the Possibility of Developing Unemployment Insurance by Industries, 1923, Cmd. 1613. HofCDeb., 5s, vol. CLXXXIV, 18 May 1925, col. 125.

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on the Treasury's long-standing goal of a contributory pensions system covering the elderly, and widows and orphans. By providing coverage for those aged 65-70, a glaring defect of the 1908 Act would be remedied: there would be partial relief for the poverty that rapidly worsened in the sixth decade of the life course. Lowering the age of eligibility would be politically attractive, cutting away the ground from under socialists who wanted universal pensions at age 60, and would legitimate the shift in the financing of pensions on to a contributory basis. Contributory insurance funding would throw much less of a burden on the Treasury, and would by its very basis provide limits to the monetary level and coverage of pensions. Such a shift would guarantee that any future expansion would be by a contributory scheme only; indeed, some planners even believed that the proposed new scheme could immediately replace existing non-contributory pensions. Finally, there was some hope within planning circles that such a new pension scheme would encourage the withdrawal of older workers from industry, and help alleviate the unemployment that had suddenly hit British industry. By the time that 'all-in' insurance was taken up within Whitehall, however, the post-war economic recession had begun to bite, instilling a climate of fiscal austerity highly inimical to policy innovation. 'All-in' insurance was thus born into a very hostile world: its value as a simplification of the existing system had to be set alongside any extra costs that might arise in its administration. The tension between these two influences was very noticeable in every subsequent Whitehall discussion o f all-in' insurance. The first examination was undertaken by the Watson Committee, a committee of thirteen civil servants appointed on 17 March 1922 to investigate the possibility of amalgamating health and unemployment insurance. Its chairman was the ubiquitous Sir Alfred Watson, whose mercurial rise upwards - from a humble consultant actuary to the friendly societies to the most powerful figure in social policy planning in the immediate post-war period - has been charted in the previous chapter. Watson had been responsible for many of the Geddes recommendations on public expenditure cuts, and played a crucial role in watering down various post-war radical social reform demands (such as motherhood endowment), using his actuarial knowledge to define the parameters of what was 'affordable'.18 He was now charged with the task of unifying unemployment and health insurance so that economies in administration could thereby 18

For an account of his role regarding widows' pensions, see Susan Pedersen, Family, Dependence, and the Origins of the Welfare State. Britain and France, 1914-1945 (1993),

pp. 169-75.

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be effected. The committee was split on the question of a single card combining both halves of national insurance, and thus could not recommend it, but there were other minor cost-cutting suggestions.19

The Anderson Committee But most important of all was the appointment of a committee of topranking civil servants, chaired by Sir John Anderson, Permanent Secretary at the Home Office. The story of this committee and its work is one of the little mysteries of social policy history. Though it failed to push a complete 'all-in' insurance package through the policy machine, the eventual outcome of the committee's deliberations, the 1925 Widows', Orphans' and Old Age Contributory Pensions Act, was a spectacular success for the Conservative Party and permanently changed the course of pensions policy in Britain. As has been shown, the idea of contributory pensions had a very long history. It was particularly favoured by those of conservative economic outlook, since insurance-based pensions were massively cheaper than tax-funded ones. By the early 1920s most people of a middle-way reformist viewpoint (including some on Labour's front bench) were coming round to the view that a shift of pension funding to the contributory principle would be inevitable at some point in the future, given the ageing of the British population. But there remained the several stubborn problems inherent in a contributory scheme that had been fully discussed by pension campaigners in the 1890s and 1900s: such a scheme would do nothing for women, the low-paid and casual workers who suffered the worst poverty in old age; pension levels would be limited by what the low-paid could afford in contributions; and political expediency dictated that there would have to be a large state subvention for several decades, until such a scheme became 'fully funded'. Nevertheless, to the fiscally cautious the alternative was even worse: inexorable pressure from Labour radicals and pensioners' organisations for a removal of all means tests and income limits, thus creating a universal scheme; and thereafter, demands that pensions be raised in value to some standard of decent subsistence; with an ageing population, this would create a massive (and highly redistributive) pension expenditure in twenty or thirty years' time. In short, the great advantage of the contributory principle was precisely that pension levels could be 19

Interdepartmental Committee on Health and Unemployment Insurance: First and Second Interim Reports, 1922, Cmd. 1644, and Third Interim Report, 1923, Cmd. 1821. Also memoranda in PRO PIN 1/1.

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held down to what the lowest paid could afford in contributions. The arcane mysteries of actuarial science could build a protective wall round the pension scheme, insulating it from the clamorous demands of mass democracy. The party rivalries that burst forth with the demise of the Lloyd George coalition in 1922 placed pensions back on the political agenda. The opportunity was there for any politician bold and imaginative enough to take it. Within the Conservative Party, there was considerable backbench interest in a reformed pension scheme. A small committee of MPs, headed by Sir John Marriott and including Neville Chamberlain, began to cast around for possible schemes and paid particular attention to a pamphlet on 'all-in' insurance by Thomas Tucker Broad, who had been a coalition Liberal MP between 1918 and 1922. Broad's pamphlet, entitled An cAll-Iny National Insurance Scheme. Security for All Workers

and their Families (1924), proved very popular with the public, going through eight editions in its first year of publication. Very much in keeping with the political nervousness of the early 1920s, Broad justified his plan by thoroughly capitalist arguments. The industrial unrest in the mining industry in 1921 had convinced him that 'the just aspirations of the men for security in the terrible risks of their calling' needed to be met by a scheme that would ensure 'the greater peace and prosperity of this important industry'. He thus presented a plan for one unified social insurance scheme consisting of unemployment benefit, sickness benefit, old age and widows' pensions, orphans' benefits and medical and maternity benefit financed by new higher contributions. A contributory pension scheme would be introduced immediately, providing benefits at the age of 63 of 15s Od per week for women and 25s Od per week for men initially, rising to 20s Od and 30s Od respectively in 1930. This would result in the immediate retirement from the labour market of an estimated 100,000 women and 900,000 men, who would be seduced by the prospect of receiving a generous pension without having had to pay the necessary contributions. Eventually, the scheme would be entirely contribution-funded, and the existing 1908 scheme could be wound up. Broad was one of the first campaigners to advocate better pensions as a solution to the unemployment problem. With a million older workers retiring under the new scheme, jobs would be vacated for younger, more productive workers and industry would benefit. 'A contented workman does better and more work. Restrictions on output could be removed when the unions saw that the aged were protected', he argued. Employees would work harder: in messianic language he predicted that there would be 'a quickening right through the ranks of industry giving

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largest promise of reward to the toiler, success to trade and industry, and added strength, prosperity, and greatness to the State.'20 However, one major weakness of Broad's scheme was that he said nothing on the crucial question of whether and how these new pensioners would be compelled to retire. 'Each year as workers attain the age of 63 they will retire on pensions', was his single, rather optimistic, assertion.21 But if there was to be no compulsion, then there would be nothing to stop older employees claiming the pension and continuing to work - which, as we shall see in future chapters, was a problem that was to grow in the inter-war years and have profound economic consequences. Broad sent his scheme to the Prime Minister, Andrew Bonar Law, on 17 April 1923. It was then passed on to Sir Alfred Watson, who went over it with an actuarial fine-tooth comb. Watson was in even more parsimonious mood than usual - perhaps also exhibiting civil service defensiveness towards a scheme thought up by an outsider - and he raised numerous objections. He argued that contributions to fund Broad's scheme would have to be higher than many working men and women could afford. Initially, the excess of contribution income over the amount paid out in pensions would cause the government political embarrassment, in that the amount of the annual pension vote would be reduced, thus implying that the government did not care for pensioners. Thereafter, the cost of the new pension scheme would rise alarmingly. Existing pensioners would feel great resentment towards the cohorts of new retirees who received higher, non-means-tested pensions without having had to pay for them. However, Watson did suggest that it might be possible to introduce a new insurance pension of 15s Od per week, payable at the existing age of 70, financed by a weekly contribution of 4d per week. Pensioners would qualify if they had paid contributions for at least twenty years, or half the period since the commencement of National Health Insurance contributions in July 1912, whichever was the shorter. Interestingly, Watson viewed insurance as a way out of the 'penalty on thrift' problem: applying it 'would help to delimit the class in whose case a means limit really does amount to a thrift disqualification'. As was to be expected, Watson was entirely negative on the need for improved pensions. There was 'no strong reason for increasing existing pensions in a time of falling prices', especially in the case of agricultural labourers where the combined husband-and-wife pension, if raised, 20

21

T. T. Broad, An 'All-in3 National Insurance Scheme. Security for All Workers and their Families (1924), pp. 2, 4-5, 13-15, 18, 24. Ibid., p. 24.

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might come close to normal wage levels. Repeatedly, he warned that little more could be levied from workers in higher insurance contributions. And he made numerous technical criticisms. In the absence of a strict, actuarially sound contributory scheme all he could suggest was that pensioners who had been eligible for National Health Insurance should be able to claim the 1908 pension without any means-testing. (This simple but effective idea was to be incorporated in the 1925 contributory pension scheme.) All in all, the private memoranda suggest that Watson and his senior civil service colleagues, perhaps mindful of the worsening economic situation, were now reluctant to envisage much in the way of radical social policy reform.22 However, Watson's political masters had other ideas, and wanted action. The post-1922 political pressures for reform over-rode the need for economy, and led Baldwin to instruct his civil servants to investigate the possibility of a new contributory pensions scheme. Though assuming prime ministerial office in May 1923, Baldwin only set the planning in motion in the following November - just before he somewhat precipitously went to the country on the issue of tariff reform. But however languid his manner and method may have been, Baldwin's role does seem to have been decisive: Watson informed his colleagues on 19 November that, 'on instructions from the Prime Minister', contributory pensions were to be put high on the planning agenda.23 The committee was formally constituted on 13 December, by which time Baldwin had lost the election. There then followed a period of political hiatus, during which the outgoing Conservative government decided to hand over power to a minority Labour government. Over the Christmas and New Year period of 1923-4, therefore, the Anderson Committee examined 'all-in' insurance and the narrower issue of contributory pensions. It performed one of those rapid and high-quality investigations for which the senior civil service is famous, being able to do this because of the expertise, experience and Whitehall power of its personnel. To some extent, of course, the ground had already been laid out for it in public discussion; and it simply began where the Watson Committee had left off. But it went much further, making several important and far-reaching recommendations for the whole income maintenance system (such as the handing over of the Poor Law to Public Assistance Committees, and the creation of a new 22

23

'National Insurance and Old Age Pensions. M e m o r a n d u m by the Government Actuary', 26 July 1 9 2 3 , P R O P I N 1/1. T h o u g h corresponding cordially with Broad, Neville Chamberlain had also doubted the accuracy of Broad's calculations. See Neville Chamberlain Papers N C 7/11/18. 'Schemes of Special Help. M e m o r a n d u m by the Government Actuary', 19 N o v e m b e r 1 9 2 3 , P R O P I N 1/1.

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assistance scheme as an alternative to the Poor Law) that reflected its appreciation of the fact that mass unemployment was going to be longterm. Chaired by Sir John Anderson, its membership consisted of the leading figures of the relevant departments: Sir Horace P. Hamilton (Customs and Excise), John Lamb (Scottish Office), Sir Arthur Robinson (Ministry of Health), Horace Wilson (Ministry of Labour), H. D. Hancock (Ministry of Labour and the committee's secretary) and, once again, Sir Alfred Watson. The extraordinarily high calibre of the Anderson Committee indicates the importance that old age pensions had assumed. With ruthless efficiency, the committee went through the several possible options for pensions reform. There was very strong pressure to end the 'penalty on thrift', and only a universal scheme with no means tests would satisfy this. Anything less would merely be a postponement: for example, trying to differentiate between separate sources of income, and permitting some (such as friendly society benefits) but not others (such as gifts from relatives), would be a headache to administer and would create yet more anomalies and 'hard cases'; soon the demand for universal pensions would reappear. But a universal scheme would 'impose formidable new financial burdens on the state', Anderson warned. At 10s Od per week but with a lowered eligibility age of 65, it would cost an anticipated £73,000,000 in 1925 and £117,000,000 in 1945 - as against the existing scheme's anticipated £24,000,000 in 1925 and £40,000,000 in 1945. Even with a universal scheme in place, critics might not be satisfied: if wealthy old people were entitled to draw the same flat-rate pension as the poorest, then there would be strident demands for additional payments for the very poorest pensioners and means tests would hence reappear. A second alternative was a system of supplementary pensions based on the individual's record of insurance contributions, to be grafted on to the 1908 scheme and payable at the age of 70; but this would in effect be a dangerous admission of the fact that the existing pension was too low in amount, and would also render future governments vulnerable to pressure for across-the-board increases. A third idea given some consideration in Whitehall was to set up a 'general fund', financed by National Health Insurance contributions, which would be used to make special assistance payments to the unemployed and supplementary pensions to pensioners in need. But to redistribute the contributions of current employees in this way would flagrantly violate the insurance principle founded by the 1911 National Insurance Act - important as a legitimating device - and hence on political grounds it 'could not be entertained'. Finally, brief consideration was given to the possibility of

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replacing the existing 1908 scheme by a contributory one; but this would throw the many uninsured elderly back on to the Poor Law, thus reversing the whole intention of the 1908 Act. However, such difficulties could be avoided by a system of contributory pensions for those aged 65-70 and linked to National Health Insurance. Somewhat disingenuously, the Anderson Committee concluded in their private deliberations that cthe limitation of such a scheme to the employed population could be justified on the ground that the risk of old age affected the employed population more seriously than the non-employed'. In fact, the reverse was true, since the severest poverty in old age affected those with the worst employment records, particularly women and casual workers. The interim report admitted this in its printed version: it pointed out that whereas 63 per cent of the female population aged 70 or over were in receipt of old age pensions, only about 7 per cent of women aged 65-70 were National Health Insurance contributors. But the only option that would steer a way through all the above difficulties and effectively stem the political pressures for universal, tax-funded pensions was a contributory scheme for those aged 65-70. 2 4 The immediate conclusion of the committee was to reject one grand, unified insurance scheme with a single card, oddly justifying this on the very grounds that had been used by supporters of call-in' insurance to argue their case. Acknowledging that the existing system was chaotic and overlapping, the report then came up with a classic argument for doing nothing to improve the situation: 'the public have become thoroughly accustomed to the existing bases and methods of provision and powerful interests are entrenched in these systems'. 25 There then followed a curiously hostile, perhaps Treasury-inspired reference to the whole principle of non-contributory pensions: 'It may be represented that, if the State undertakes to provide a pension at a given age without requiring the pensioner to contribute to its cost, the community is being pauperised and the incentive to make provision against old age is being destroyed.'26 But, the report continued in a somewhat lofty mandarin tone, 'it must be assumed that this consideration was in the mind of Parliament when the original Old Age Pensions Act was passed', and 24

25

Information in the previous four paragraphs from: Anderson Committee, 'Summary of Conclusions Reached at Meeting on Tuesday 18th December'; 'Notes of Provisional Conclusions Reached at Meeting o n 28th December'; 'Summary of Conclusions Reached and Points Discussed - 2nd January 1923'; Anderson to Baldwin, 8 January 1924; and Committee on Insurance and Other Social Services. First Interim Report. Old Age Pensions. Possible Changes on a Non-Contributory Basis (8 Jan. 1924); all contained in P R O P I N 1/2. 26 First Interim Report, pp. 1 - 2 . Ibid., p. 4.

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thus it was pointless to re-open the question. (An interesting reflection of Treasury dislike of the 1908 non-contributory pension is the contemptuous usage, in departmental memoranda at this time, of the term 'free pension' to describe it.) Quickly discussing the difficulties outlined above, the committee firmly dismissed any proposals other than a new, limited contributory scheme for the 65-70-year-olds, and promised to give this full consideration in a second report. 'We have worked with all possible speed', Anderson wrote to Baldwin on 8 January 1924, enclosing a copy of the committee's first interim report that had been composed and printed in only three weeks.27 He promised to look into the actuarial details of the proposed new scheme, but warned that this would take time. Time, however, was one thing that Baldwin did not have. He had already decided to hand over power to Ramsay MacDonald's first Labour government. Shrouded in some secrecy, the Anderson Committee continued its work. Labour's lost opportunity The last possibility of a universal non-contributory scheme being introduced came with the minority first Labour government, which held office for little more than nine months, between 23 January and 4 November 1924. In the general election campaign of December 1923, all three political parties had promised to tackle the thrift disqualification issue, and Labour candidates had gone farthest of all, even implying that means-testing would be done away with completely. Many of its more radical supporters hoped that the new government would seize this opportunity to honour its long-standing promises and introduce a completely tax-funded (and hence highly redistributive) universal pension scheme, paid at the age of 70 or even 65, and unencumbered by any means tests or income limits - ca civic right and not a compassionate grant', as George Thorne put it.28 It seemed a hopeful sign that the new Labour Chancellor, Philip Snowden, had been a passionate campaigner for non-contributory pensions all his life. Labour should have seen the dangers looming on the political horizon if they failed to seize this last chance, for the official Conservative manifesto had included a specific promise to reorganise insurance 'against old age, ill-health and unemployment'. This could only mean one thing - a contributory pension scheme to replace the existing one. By contrast, Labour's manifesto 27 28

Anderson to Baldwin, 8 Jan. 1924, P R O P I N 1/2. HofCDeb., 5s, vol. C L X X V , 25 June 1924, col. 4 8 5 .

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merely promised 'generous provision for the aged people, the widowed mothers, the sick and disabled'.29 It was not to be. Once in office, Labour let slip the opportunity and, by doing so, opened the way for the Conservative Party to effect the crucial shift to contributory pensions that the Treasury had been working towards ever since the 1908 Act. Thus, Labour handed to its opponents a unique opportunity to make much political capital out of social reform. Even more historically damning is the fact that, in office, Labour did little more than what the Conservatives would have done anyway. The general election of 6 December 1923 had produced an inconclusive result: though the Conservatives had won the largest number of seats (258), they were in a minority compared with the total seats of Labour, Liberal and other MPs (357). The Liberals decided to support Labour (albeit very conditionally), and thus the prospects for a Conservative government were not good. Those with sharp political acumen, such as Neville Chamberlain, favoured handing over to Labour immediately after the election, on the basis that 'they would be too weak to do much harm but not too weak to get discredited'. Chamberlain speculated that Labour might be able to remove the income limit for old age pensions and introduce a widows' pensions scheme, but knew that in most other areas Labour's scope for radical innovation would be very constrained indeed.30 However, Baldwin's administration had to continue in office until the constitutional position was resolved. This they did until their final cabinet meeting of 22 January 1924, when Baldwin announced that he had decided to resign and recommend Ramsay MacDonald as his successor. For a few weeks, therefore, the Conservative government behaved as any new government would, and drew up a programme of legislation to be included in the King's speech. It was agreed that on old age pensions there should be included a promise to remove the thrift disqualification by raising the income limit.31 The basis for this decision was a memorandum put to the cabinet by William Joynson-Hicks, Minister of Health, in which he warned of the escalating cost of pensions but pointed out that all the political parties had promised to remove the thrift disqualification. An inexpensive way of achieving this (pending the more radical overhaul to be proposed by the Anderson Committee) would be to distinguish income received from sources such as savings, 29 30 31

F. W. S. Craig (ed.), British General Election Manifestos 1900-1974 ( 1 9 7 5 ) pp. 4 7 , 4 9 . Diary, 9 D e c . 1 9 2 3 , Neville Chamberlain Papers, N C 2 / 2 1 . Cabinet minutes of D e c . 1923 and Jan. 1924, esp. Cabinet 3 ( 2 4 ) , 11 Jan. 1924, P R O CAB 23/46.

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investments, friendly society or trade union benefits, superannuation funds, gifts, etc., from money earned through working, and only remove means-testing from the former.32 Clearly, Joynson-Hicks believed that this would appease the pensioners' lobby, while still avoiding the full expense of a universal scheme, since (as the Ryland Adkins episode had shown) it was the means-testing of income from thrift and saving that caused most resentment. In fact, Labour did even less than this. Once in office, its only innovation was a cautious raising of the income limit - rather than its complete abolition - to a starting point of £39 per annum (15s Od per week) for income other than earnings from employment; the upper limit was henceforth to be £88.17s 6d per annum. A formal distinction was thus made between occupational earnings and other forms of income. It was hardly the radical step demanded by some Labour backbenchers, and it caused much embarrassment among the parliamentary leadership, for it seemed shabby and parsimonious - an outward impression that was an accurate reflection of the bill's origins. On 18 February 1924 the Labour cabinet were forced into a decision by an imminent House of Commons resolution on widows' pensions to be proposed by the Labour backbencher, Charles Dukes. Snowden was instructed to defuse criticism by making no promises on widows' pensions, £in view of the financial situation', but to indicate that the government would be taking action 'to remove some of the defects of the old age pension system'.33 Snowden was determined to resist backbench calls for a complete abolition of means-testing, on the grounds of cost, and stressed the financial difficulties in a memorandum to his cabinet colleagues. On universal pensions at age 70 he was adamant: 'It is not my intention to discuss the merits of this suggestion as its cost is in present circumstances prohibitive'. Using phraseology identical to Joynson-Hicks's earlier memorandum (indicating that he had used it for inspiration), Snowden warned of rising pension costs if the means qualification was completely abolished: by 1945, the pensions bill would be £29,000,000 more than the anticipated £40,000,000 under the existing scheme. And his recommendation was more even cautious than his predecessor's - merely a slight raising of the means-testing limits for income other than earnings.34 Snowden's proposals were cursorily approved by the cabinet on 29 April, by the simple device of allocating 32

33 34

C.P. 19(24): 'Old Age Pensions. M e m o r a n d u m by the Minister of Health', 10 Jan. 1924, P R O C A B 2 4 / 1 6 4 . Cabinet 1 4 ( 2 4 ) , 18 Feb. 1 9 2 4 , P R O C A B 23/47. C . P . I 8 0 ( 2 4 ) : 'Old Age Pensions. M e m o r a n d u m by the Chancellor of the Exchequer', 13 March 1 9 2 4 , P R O C A B 2 4 / 1 6 5 .

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part of the forthcoming budget surplus to an easing of the limits, to be incorporated in a bill, and the precise details were approved on 15 May.35 Labour's fiscal conservatism was reflected in the fact that no new money was to be raised. Thus in introducing the Old Age Pensions Bill in the Commons on 25 June 1924, Philip Snowden, repeatedly uttered grave financial warnings about the 'prohibitive' cost if pensions were made universal. They would cost £69,000,000 in twenty years' time, and would have to be paid out to wealthy individuals who could not possibly need them, such as millionaires and dukes. (One member impishly asked Snowden whether, out of twenty-two Dukes in Britain, there were enough over the age of 70 to constitute such a serious problem.) Snowden stressed that, within the constraints of sound finance, the new bill would do something for pensioners. Giving the most favourable example possible, he pointed out that a pensioner couple with an income of 20s Od per week from earnings and 30s Od per week from other sources would still receive a joint pension of 20s Od per week, bringing their total weekly income to £3.10s. (Such instances were, in fact, extremely rare.) He also gave what in retrospect proved to be over-optimistic estimates of the increase in pensioners that would be brought about: he claimed that, out of a total of 917,000 old age pensioners, 63,000 did not get the full pension - they would now do so; in addition, another 173,000 people aged 70+ currently excluded by the income limits would in future be eligible in full or in part. Thus 1,090,000 people out of a total of 1,600,000 aged 70+ would henceforth qualify.36 In fact, the number of old age pensioners increased by less than Snowden's estimate - from 916,771 on 31 March 1924 to 997,160 on 31 December 1924. Interestingly, the Treasury had no means of knowing how much of this increase was a result of the 1924 relaxations.37 Liberal and Conservative MPs took considerable delight in taunting Snowden for his inability to keep Labour's election promises. But on all sides there was an awareness that the 1908 pension scheme was landlocked, and the arguments of the contributory pensions lobby began to look more and more convincing. As two social policy experts were later to remark, the 1924 relaxations 'extended non-contributory pensions as widely as the system permitted'38 - 'the system' meaning for them, and for Philip Snowden, the constraints of fiscal orthodoxy and hence the 35 36 37 38

Cabinet 28(24), 29 April 1924, and Cabinet 32(24), 15 May 1924, PRO CAB 23/48. HofCDeb., 5s, vol. CLXXV, 25 June 1924, cols. 4 6 9 - 7 9 . Ibid., vol. CLXXXI, 6 March 1925, cols. 8 1 0 - 1 1 . Sir Arnold Wilson and G. S. Mackay, Old Age Pensions: An Historical and Critical Study

(1941), p. 85.

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necessity for some means-testing. Endlessly refining the means-testing procedures in an attempt to make them more fair simply made them appear more and more pointless. This was forcibly illustrated when MPs went round and round in circles trying to define what constituted earnings from work, as distinct from other forms of income. 39 Yet in a climate of economic recession and economic austerity such as pertained in the early 1920s, mainstream political opinion increasingly viewed a universal, tax-funded scheme as an impossibility - especially as the proportion of pensioners in the population would rise in the future. Speaking in the Commons on Snowden's bill, the MP Sir John Marriott summarised the three reasons why, in his view, the pensions dilemma was 'intolerable and indefensible'. First, 'because at the present time very inadequate benefits are enjoyed at an enormous cost to the taxpayer'. Second, the means-testing procedures were highly irritating to the recipients, such that a very small number of anomaly cases tended to discredit the whole scheme. Finally, the existing system unfairly tried to distinguish between the thrifty and the non-thrifty - an inherently impossible task, given the enormous variety of human situations.40 As a campaigner for contributory pensions, Marriott was indulging in some kite-flying. But he had succinctly voiced the dilemma faced by the Labour leadership. Most Labour cabinet ministers were deeply imbued with the tenets of inter-war fiscal orthodoxy, viewing cuts in public expenditure and reductions in taxation as the only ways to assist the export trades which, it was believed, held the key to Britain's economic revival. For example, Labour's 1922 general election manifesto had declared that 'Labour attaches the utmost importance to economy in the public administration'.41 None held this view more strongly than Labour's 'iron chancellor', Philip Snowden. In presenting his budget proposals to cabinet, Snowden had outlined the key principles upon which it was based. The first two of these principles were plain and uncompromising: '(1) To impose no new taxes. (2) To make no additions to existing taxes.'42 Predicated on those two prior assumptions, pensions reform could only be miserly. Added to this, it is likely that there was a Treasury-driven, relentless backstairs campaign being mounted by senior civil servants to persuade Labour cabinet ministers round to the view that contributory pensions were the only viable option. Yet pressure for universal and higher pensions from the party's left 39 40 41 42

HofCDeb., 5s, vol. CLXXVI, 23 July 1924, cols. 1469-85. Ibid., 5s, vol. CLXXV, 1 July 1924, col. 1219. Craig, Election Manifestos, p. 93. Cabinet 28(24), 29 April 1924, PRO CAB 23/48.

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wing touched a sensitive spot with the leadership, most of whom were well aware of the extent of old age poverty. Snowden's easing of the means tests had disappointed many backbenchers, and even some cabinet ministers. The first Labour government stands as a watershed in the Party's history - the moment of truth when its radical demands came up against the implacable opposition of the senior civil service, the financial institutions, the ritualistic inertia of parliamentary democracy, and the constraints of 'sound' finance. To Labour right-wingers like Snowden and MacDonald, the period in office revealed clearly the limits within which future Labour policies would have to be set if they were to be politically practicable. Snowden later wrote that the Labour Party was 'composed in the majority of new and undisciplined members who would expect the Labour government to do all sorts of impossible things'. It was important to show that Labour was 'not under the domination of the wild men'. 43 To radicals, Labour's nine months in office showed that policies should be even more socialist and should aim to transform the institutions of the capitalist state: from this was to flow the ILP's 'Socialism in Our Time' strategy of the late-1920s. Though somewhat muted for the sake of party unity, these tensions manifested themselves throughout the nine months of Labour's minority rule. On the pensions question, the more radical spirits in the cabinet had insisted that Snowden should make it clear to parliament 'that his proposals are an instalment of the government's policy, and not necessarily the last word', 44 and on 23 May 1924 the Lord Privy Seal, J. R. Clynes, circulated to his cabinet colleagues a letter he had written to Ramsay MacDonald complaining that the 1924 relaxations 'fall far short of the policy which as a Party we have advocated in the past, and to which many individual members are personally pledged'. 45 But, given the electoral precariousness of the first Labour government, these rebels were reluctant to rock the boat. At one point, Snowden did make a vague promise to introduce a mothers' pensions scheme and lower the old age pension age to 65, but he pointedly refused to elaborate.46 Hence when the Anderson Committee's second interim report was presented to Philip Snowden in July 1924, it came as something of an embarrassment. The fact of its imminence was conveyed to the cabinet on 2 July, and a decision was made to discuss it at the next cabinet meeting. Labour's Home Secretary, Arthur Henderson, even suggested 43 44 45

46

Snowden, Autobiography, vol. II, pp. 595—6. Cabinet 32(24), 15 May 1924, PRO CAB 23/48. C.P.315(24): 'Old Age Pensions. Removal of Thrift Disqualification. Copy of Letter from the Lord Privy Seal to the Prime Minister', 23 May 1924, PRO CAB 24/167. HofCDeb., 5s, vol. CLXXV, 25 June 1924, col. 479.

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that a cabinet committee should be set up to consider it and make recommendations.47 At the next meeting, on 9 July, another discussion took place but (owing to the absence of the Prime Minister) no cabinet committee was appointed. Yet again, the report appeared on the cabinet's agenda for their next meeting of 15 July, but - mysteriously the agenda was changed, and this item was dropped.48 The contents of the report were probably seen by only a few ministers, who were sworn to secrecy, and some of them may have privately supported its conclusions. Nothing was made public, but news of the Labour leadership's dilemma over the Anderson recommendations must have leaked out. Subsequently, the Conservatives were to exploit it with glee. We will never know for sure what Labour would have done in 1924 had it possessed a workable parliamentary majority. Subsequently, Snowden was to declare that the Conservatives' 1925 Act 'was based upon a plan which the Labour government had prepared, and which they would have introduced that year if they had remained in office' - but this was written when he had joined the National government and was even more favourably inclined towards the Tories (and even more hostile to his previous colleagues on the left).49 Clearly, it would have required a masterful combination of tactful persuasion and political bullying for the Labour leadership to have brought its own backbenchers round to supporting a contributory pensions scheme, and as the Labour government reached the end of its difficult life, such an effort was deemed not worthwhile. The pensions episode is thus the quintessence of the collapse of Labour's radicalism in 1924. Faced with the problems of surviving as a minority government, harassed at every turn by the majority opposition of Liberals and Conservatives and thus unable to produce any really innovative legislation, Labour did nothing. 47 48 49

Cabinet 39(24), 2 July 1924, PRO CAB 23/48. Cabinet 40(24), 9 July 1924, and Cabinet 41(24), 15 July 1924, PRO CAB 23/48. Snowden, Autobiography, vol. II, p. 721.

9

Neville Chamberlain, the 'New Conservatism5 and the 1925 Act

Labour's failure of nerve meant that when the Conservatives swept back into office in November 1924, with a massive 223-seat majority, the way was open for the introduction of a contributory pensions scheme. This was to be the cornerstone of the 'New Conservatism', symbolising the determined efforts of Baldwin, Churchill and Chamberlain to defeat socialism on its own terms by forging a new kind of social policy - one that would woo the working-class electorate while involving minimal redistribution between classes and, if possible, no contribution from the state. The combination of political creativity and Treasury determination was to prove irresistible. Much of the groundwork had already been done by the Anderson Committee, which had skilfully narrowed all the policy options down to one. By the time they completed their second interim report and passed it on to Philip Snowden, the committee members had had five months in which to consider the question carefully.1 The first half of this second interim report dealt with widows' pensions, and firmly concluded that such a scheme could only be contributory (because of the nation's economic difficulties), compulsory (for actuarial soundness) and limited to the employed population (so that the existing National Health Insurance machinery could be used to deduct contributions). A contributory basis would also avoid all the means-testing problems that were the source of such bitterness in the existing old age pension scheme. The 'male breadwinner' assumption was paramount. The aim of the widows' and orphans' pension scheme was to reward the 'husbandless' woman: it was 'to enable mothers, in cases where the family breadwinner is dead, to devote proper care to the upbringing of dependent children'. There was also a strong element of social engineering, reflecting the emerging view in Whitehall that pensions could lower registered unemployment by inducing certain groups marginal to the labour market (particularly, women workers and older male 1

Committee on Insurance and Other Social Services. Second Interim Report (1924), PRO PIN 1/3.

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201

workers) to withdraw from paid work. An old age pension at the younger age of 65 would meet the criticism 'that the qualifying age for pension is too high and that the scheme fails to give the needed relief to workers whose value as industrial units has begun to be seriously impaired by age'. The report claimed, on the basis of a recent survey into 10,000 unemployment benefit claimants, that, of those aged 60 and over, 17.6 per cent of males and 30.8 per cent of females were Verging on the unemployable'. Widows with children were to be particularly targeted: 'The object and the result of a grant of pension should be to withdraw the majority of widows from the competitive labour market, at any rate when they have the care of dependent children.'2 However, the committee was able to recognise that such a withdrawal for the period of motherhood would seriously affect a widow's labour market value when she returned to work: hence the pension was to continue to the age of 70. After outlining the structure of widows' pensions, the second interim report then went on to consider the proposed old age pension scheme, taking up the arguments it had left off in its rather rushed first report. Complete and immediate substitution of the existing non-contributory scheme by a new contributory one was fiscally attractive: there is no doubt that the committee's members would have liked to have engineered the total destruction of the 1908 non-contributory scheme. But such a radical step was deemed politically impossible, since it would leave the majority of elderly women (who, in turn, formed a majority of pensioners) without any coverage. Introducing a new contributory scheme with higher benefits for those aged 70 and over, to run in parallel with the 1908 scheme, would be politically dangerous, since it 'would probably be adduced as proof that the current scale of free pension was inadequate and would stimulate a demand for a revision of the scale of free pensions in an upward direction which it would be difficult to withstand'.3 Thus the Anderson Committee re-asserted its original idea that a new scheme could only apply to the 65-70 age group, and would have to be at the same level as the existing pension. It pointedly ignored the fact that practically everyone - including Stanley Baldwin - agreed that 10s Od per week was too low.4 Quickly, the committee outlined its proposed new scheme for a pension linked to the individual's contributory record under the National Health Insurance system: this would be paid at the rate of 10s Od 2 4

3 Ibid., pp. 7, 17. Ibid., p. 16. 'The pension itself is inadequate in amount', admitted Baldwin in his 1924 general election manifesto. F. W. S. Craig (ed.), British General Election Manifestos 1900-1974

(1975), p. 58.

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per week between the ages of 65 and 70 to those who held 'insured status' for a period of at leastfiveyears prior to the attainment of the age of 65. At the age of 70, as Watson had earlier suggested, such pensioners would proceed to the non-contributory pension which they would receive without any means-testing. The political attractiveness of such a scheme was obvious: initial entrants to it would receive full pension entitlement provided they possessed at leastfiveyears' worth of National Health Insurance contributions immediately prior to attaining the age of 65. 5 For reasons offiscalsoundness, the scheme had to have an actuarial basis; but for reasons of political expediency, this had to be underpinned by a pay-as-you-go element. Much of the groundwork had already been done, therefore, and by ignoring the Anderson Committee's second report Snowden had presented the incoming Conservatives with a golden opportunity. However, for the complex political and administrative pressures described earlier in this chapter to come together and produce actual legislation it required the guiding hands of a few determined, powerful and energetic politicians. In 1924 three such figures were ready and willing - Stanley Baldwin, Winston Churchill and Neville Chamberlain. It is difficult to unravel the precise respective contributions to the 1925 Act of each of these three leading architects of the 'New Conservatism'. As has been shown, Baldwin played an important inspirational role. But the tricky task of piloting the legislation through all the difficult shoals of policymaking and resource allocation fell to Chamberlain and, to a lesser extent, Churchill. As historians such as John Ramsden and David Dilks have recounted, in excellent studies, Neville Chamberlain was the standard-bearer of the 1924-9 'New Conservatism'.6 Born in 1869, his family life had been deeply immersed in politics and dominated by his father Joseph who, as we have already seen, was an advocate of contributory state old age pensions in the 1880s and 1890s as a means of wooing the new workingclass voter. Like Stanley Baldwin, Neville Chamberlain had been a relatively late starter in politics - indeed, his early adulthood had been marked by a disastrously unsuccessful family business enterprise, attempting to grow sisal in the Bahamas. This experience exacerbated two aspects of his personality: a shyness of manner with strangers (often interpreted by political opponents as aloofness or contempt) and an iron determination. Several years in business in Birmingham led to an increasing involve5 6

Second Interim Report, pp. 1 8 , 2 0 - 1 . John Ramsden, The Age of Balfour and Baldwin 1902-1940 (1978), esp. ch. 12; David Dilks, Neville Chamberlain, vol. I (1984).

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ment in local politics, and eventually Chamberlain became Lord Mayor in July 1915. A second career disaster befell him a year and a half later, when he was hurriedly appointed Director-General of National Service by Lloyd George in late December 1916 and given inadequate facilities and time in which to get his department off the ground. Feeling the full brunt of Lloyd George's withering contempt for political failures, Chamberlain resigned after only eight months in the post. Despite frequently ambivalent feelings towards the ugly world of politics, Chamberlain stood for parliament in 1918 for the Birmingham Ladywood constituency and was elected. His opportunity came with the accession of Baldwin to the leadership of the Conservative Party in May 1923, and the marginalisation of the 'old guard' Tory leadership of Lord Curzon and Austen Chamberlain. A new kind of Conservative politician had emerged, and Neville Chamberlain was its quintessence. The personal and career difficulties he had experienced - against a background of growing disarray within the Conservative and Unionist Party - strengthened his resolve to succeed in national politics. The young Neville Chamberlain had not exactly welcomed the 1908 pension scheme, describing it as 'radically rotten in principle'7 and 'simply a scandalous attempt to catch votes . . . a direct discouragement of thrift, to which nevertheless the general drift of thought among the working classes is tending'.8 From the very beginning, arguments based on class economic self-interest were wrapped up in moralistic rhetoric. But Chamberlain possessed the same radical, interventionist inclinations as his father, and these pulled him in the direction of social reform. Just as Joseph Chamberlain was to grasp the need to woo the new working-class voter in the 1880s and 1890s, so his son Neville was thinking on exactly the same lines in the politically volatile years after 1918. Like Baldwin, Chamberlain realised that the Conservative Party would only survive the challenge of mass democracy if it developed a new kind of populist capitalism. The state should work to instil a petty capitalist mentality in working men and women by judicious social reforms and the spread of private property ownership. Thus, as early as 1918, he was urging the party to develop an interest in social reform; as David Dilks observes, he realised that the party, 'especially with the electorate nearly trebled by the Act of 1918, could not survive if it were identified with the middle class or the rich, the diehards, the establishment'. 9 On a personal level too, Chamberlain found the socialist threat 7 8 9

Quoted by Arthur Greenwood, HofCDeb., 5s, vol. CCCL, 27 July 1939, col. 1697. Quoted in Keith Feiling, The Life of Neville Chamberlain (1946), p. 48. Dilks, Chamberlain, vol. I, p. 264.

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uncomfortably close: his Labour opponent for Birmingham Ladywood in the 1918 general election put forward a very radical manifesto, including nationalisation of the mines, factories, land and railways, a work guarantee for the unemployed, the conscription of wealth to pay for the war, abolition of the House of Lords and - significantly mothers' pensions. In the 1922 general election, Chamberlain's constituency majority over Labour fell to less than 2,500 votes, compared with nearly 7,000 in 1918; and in 1923 it fell to 1,500. In 1924, he was elected by a majority of only seventy-seven votes, after four recounts. Thereafter, he moved to the safe Conservative seat of Birmingham Edgbaston, which he represented until his death. By 1923-4 Chamberlain saw contributory pensions as the cornerstone of a new strategy of Conservative social reform and, as John Ramsden observes, he quickly grasped the fact that the 'New Conservatism' would stand or fall on its social policy.10 It is clear that it was the insurance basis of the plan that attracted him. Contributory insurance possessed important political and economic advantages: it personalised the notion of the right to benefit, in contrast to tax-funding, and thus helped fashion a mentality of competitive individualism among citizens; the solidaristic and redistributive effects of the existing non-contributory scheme could thus be destroyed; and, most important of all, the contributory principle would build solid defensive walls round the pension scheme, insulating it from demands for improvements. Contributory pensions were to be the perfect example of a 'New Conservatism' social reform that would benefit the working class, cost the state relatively little, boost the fortunes of the Conservative Party and weaken Labour's electoral appeal by removing the 'thrift disqualification' which radicals were using as a justification for an expensive, universal scheme. Ending means-testing would also assist the expansion and profitability of the private pensions industry, especially if the level of any new state pension was kept low. * * Neville Chamberlain was thus determined to play the contributory pensions card for all it was worth. During the nine months of the minority Labour government, he chaired an 'All-in Insurance SubCommittee of the Unionist Party' to draw up a plan. Reflecting its desire to assist the private sector, this committee received crucial advice from Duncan Fraser, actuary to the Royal Insurance Company of Liverpool, and worked in some secrecy while the Anderson Committee 10 11

Ramsden, The Age ofBalfour and Baldwin, p. 267. For a brief discussion of how the 1925 Act benefited employers' company pension schemes, see Leslie Hannah, Inventing Retirement. The Development of Occupational Pensions in Britain (1986), p. 29.

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was simultaneously completing its second interim report. It is clear that there was some covert cross-fertilisation between the two committees: for example, Fraser cryptically recorded on 7 July 1924 that he had seen Watson 'a month ago' concerning some actuarial calculations.12 (It is significant that some of the records of this committee ended up in the Public Record Office.) A comprehensive insurance scheme should have four elements, Chamberlain argued: '(1) it must be contributory, (2) it must be compulsory, (3) it must cover the 4 main needs for security: unemployment, sickness, old age, and death, leaving widows and dependants, (4) the provision for old age must offer sufficient to induce the old men to retire'.13 The fourth objective was an industrial objective, and meant that initially Chamberlain was only concerned with older male workers. Indeed, in the discussions by Chamberlain's committee widows' and orphans' pensions were only tacked on as an afterthought - really only a political sweetener. 'What we want is a workable scheme, which will give us a pension sufficiently high to make it worthwhile for the old men to come out of industry', was Chamberlain's instruction to Fraser, adding that 'in the first instance the enquiry will deal only with employed males'. 14 The improved pension was thus to be an inducement to retire, and in Fraser's memoranda the emphasis was always on pensions to men. But it is clear that Chamberlain also aimed to fashion a scheme that would have maximum political attractiveness. Thus he initially instructed Fraser to do the necessary actuarial calculations to produce a scheme with pensions of 25s Od per week. If levels of contributions could not sustain this, then 25s Od would be paid from ages 65 to 70, and 15s Od thereafter. Agricultural workers would receive lower pensions, because of their diminished ability to pay contributions, and widows' pensions, if introduced, would be 15s Od per week (plus 5s Od for each orphan). Chamberlain appears to have been very keen to offer these high benefits, and expressed some irritation when Fraser suggested a more practicable maximum pension level of 15s Od per week.15 A major weakness of the Chamberlain scheme was that large reserve values would be needed (underwritten by the Treasury) if full pension rights were granted immediately to those entering the scheme aged over 16; they would have to receive reduced benefit until the scheme 12 13 14

15

Fraser to Chamberlain, 7 July 1924, PRO PIN 1/4. Quoted in Feiling, Chamberlain^ p. 114. Chamberlain to Fraser, 20 May 1924, and 'Memorandum for Mr. Duncan C. Fraser', by Chamberlain, 20 May 1924, PRO PIN 1/4. Chamberlain to Fraser, 11 June 1924, ibid.

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matured fully in forty-nine years' time (or pay progressively higher contributions). Even for a 16-year-old the contributions would have had to be high (Is 8d per week). For this reason, Chamberlain's committee more or less rejected the possibility of the 25s Od pension in July 1924.16 Over the summer of 1924 there was some to-ing and fro-ing over the administrative and funding mechanisms, and on 20 October Fraser's final report was completed - nine days before the general election. Fraser had scaled down his calculations to produce a pension of 15s Od per week at ages 65 to 70, and a 5s Od supplement to the existing 1908 pension at age 70 (eventually replacing it entirely with a pension of 15s Od per week). Contributions for a 16-year-old would be more realistic - IVid per week from men. The 1908 non-contributory scheme would thus be 'rapidly superseded', and eventually would be no more than a safety net. By 1991, a considerable amount of public expenditure would be being saved.* 7 In his October 1924 general election manifesto, Chamberlain argued that the only way to end the present 'objectionable and irritating enquiry into private affairs' which was a consequence of means-testing was to have a contributory scheme. Confident that his committee's version would be implemented, he even promised that such a scheme would give its beneficiaries 'a larger amount at an earlier age'.18 Likewise, Baldwin had included a long section on pension reform in the official Conservative manifesto, admitting that the existing pension level was too low and promising a contributory scheme 'at an earlier age and of a substantially larger amount'.19 The 'New Conservatism' in action Appointed Minister of Health in the Baldwin administration, Chamberlain seized the opportunity presented by this relatively new ministry with its wide powers and enormous range of public responsibilities. It took a politician of his exceptional energy and determination to realise the full potential of the demanding Health portfolio. Within days of assuming the seals of office, he drew up a list of twenty-five bills that he wished to introduce over the next five years, of which twenty-one had passed into law by 1929.20 One of these was a bill for widows' and orphans' pensions, to which would be attached a new old age contributory 16 17

18 19 20

Chamberlain to Fraser, 25 July 1924, ibid. Memo by Duncan C. Fraser, 'A Contributory Scheme of Pensions for Men', 20 Oct. 1924, ibid. Neville Chamberlain Papers, NC 18/l/457a (hereafter NC). Craig, Election Manifestos, p. 58. Feiling, Chamberlain, p. 129; Cabinet 64(24), 26 Nov. 1924, PRO CAB 23/49.

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pensions scheme. It was much less of an 'all-in' insurance package than the previous year's planning had promised; and it did not go all the way and replace the existing scheme. Nevertheless, Chamberlain had boldly seized the opportunity to make pensions the flagship of the New Conservatism and, by doing so, effect a crucial shift in pension funding. The 1925 Widows', Orphans' and Old Age Contributory Pensions Act was a spectacular success for Neville Chamberlain personally and for his party as a whole. It came at a time of enormous personal confidence for the man: his letters and diary entries reveal a politician at the zenith of his career, revelling in the hard work, long hours and intellectual demands of high politics, enjoying excellent physical and mental health, and positively exuberant over the challenges of ministerial office. To the somewhat arcane, complex and forbidding subject of pension funding, Chamberlain brought his exceptional gifts of hard work, mastery of detail and political acumen. Not the least of the challenges was the necessity of arguing on equal terms with trained professional actuaries like Sir Alfred Watson who, Chamberlain's Principal Private Secretary later commented impishly, was 'perhaps a little difficult, but more actuarial than awkward'.21 It is an indication of Chamberlain's energy that at one point, he and his Parliamentary Secretary, Kingsley Wood, had to oversee the Pensions Bill as it proceeded through a committee of the whole House until well after midnight, with the Rating and Valuation Bill being considered in Standing Committee at 11.30 the following morning. Samuel Hoare was not exaggerating when he wrote to his colleague of the 1925 Act that 'not only is it a great personal triumph for you but it is also a historic event in the development of Conservative policy'.22 To some extent, the triumph was engineered by the tactic of surprise, which left Labour in disarray and covered with embarrassment. Chamberlain was well aware that Labour had missed its opportunity, and was determined to exploit this to the full; a few civil service advisers (such as Sir Horace Wilson) wanted the scheme delayed in view of the worsening economic situation, but Chamberlain would have none of it. Considerable secret planning took place within Whitehall over several months to make sure that the bill contained no technical flaws that Labour could seize upon. In particular, Sir Alfred Watson took it upon himself to warn that this might be the last opportunity to introduce a contributory pensions scheme.23 But first, Chamberlain - like cabinet ministers before and since - had 21 22 23

Quoted in Dilks, Chamberlain, vol. I, p. 414. Hoare to Chamberlain, 23 July 1923, N C 7/11/18/12. Sir John Walley, Social Security: Another British Failure? (1972), p. 61.

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to establish good relations with the Chancellor of the Exchequer (in this case, Winston Churchill), for extra revenue would have to be raised to fund the new scheme for several decades before it became truly actuarial and self-supporting. The closeness of their co-operation was also a reflection of the importance of the bill to the Treasury: this was one battle the Treasury was determined to win. Thus after a discussion of the proposals in cabinet on the morning of 26 November 1924, Chamberlain met with Churchill in the afternoon, and the two men agreed on their strategy. Fortunately, Chamberlain had no difficulty in persuading Churchill of the vital importance of social reform for the party's survival. Winston Churchill had just re-joined the Conservative Party after nineteen years with the Liberals (having established a reputation as a social reformer in the 1906-14 government), and was thus looked upon with some unease by Tory backbenchers - which was hardly lessened by Baldwin appointing him Chancellor. He badly needed to attach his name to popular social reforms, and viewed contributory pensions as just one such measure. He was also aware of the need for urgent action if Labour were to be pre-empted: pensions were 'a fence to jump at a gallop'. 24 The plan was to get Churchill to announce the measure in his forthcoming budget - still several months off - and follow this up quickly with legislation that would have been carefully prepared over months of planning. Chamberlain was not a man to leave such things to chance. Churchill was receptive. He was anxious to reduce direct taxation 'in order to relieve industry' - by removing 6d from income tax and cutting super-tax. 'But he would have to balance the benefits by doing something for the working classes, and for this he looked to pensions', Chamberlain noted in his diary. Churchill had examined the Anderson Committee's second interim report, and found it 'very hopeful for it was not expensive'.25 For a small additional contribution, greater protection would be offered to the working class - 'security for sixpence', as Churchill put it. Like Chamberlain, he perceived the contributory principle as a way of instilling capitalist values: it would be 'an absolutely inseparable element in our social life and eventually must have the effect of attaching the minds of the people, although their language and mood in many cases may not seem to indicate it - it must lead to the stability and order of the general structure'.26 Placing the new pension scheme in the context of tax cuts for the rich was potentially hazardous, and was to lead to considerable Labour criticism in parliament that this 'rich man's 24 25 26

Martin Gilbert, Winston S. Churchill, vol. V: 1 9 2 2 - 1 9 3 9 (1976), p. 77. Diary, 26 Nov. 1924, N C 2 / 2 1 . Quoted in Paul Addison, Churchill on the Home Front, 1900-1955 (1992), p. 241.

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budget' made the working class pay for their own benefits. But Churchill was an unrepentant advocate of capitalism: he believed that 'the rich, whether idle or not, are already taxed in this country to the very highest point compatible with the accumulation of capital for future production', and maintained that what he was doing was merely reducing a tax burden which was ca grave discouragement to enterprise and thrift and a potent factor in the tendency to high profits'.27 He argued that the state subvention necessary to grant the new contributory pensions to those who had not accumulated enough contributions was of benefit to the working class, and 'from the standpoint of social and political justice' was a counterbalance to the tax cuts.28 Churchill suggested that the two ministers should work closely together. But they were very different kinds of human beings, and the reserved, ascetic Chamberlain sometimes found it difficult to handle a volatile and rumbustious Chancellor 'who has a new idea every hour'.29 'He wished to treat the subject free from personalities (I gathered that he meant he wasn't going to claim all the credit for himself)', Chamberlain noted wryly.30 There was also some resentment on the part of Ministry of Health officials that their measure (on which they would have to perform all the hard preparatory work) might appear as yet another Treasury success. But by and large the relations between them were cordial and productive. In effect, the planning for the 1925 Act was based on an amalgamation of the recommendations of Chamberlain's 'all-in' insurance committee and the Anderson Committee. The latter was re-activated on 8 December 1924 in order to consider the Chamberlain committee's proposals, and produced a third report on 9 February 1925. Most of this was concerned with highly technical criticisms of Fraser's funding and administrative mechanisms, but beneath this veil of actuarial mystification was a fear of the political consequences if a new scheme offering higher pensions ran in parallel with the old. Fraser's proposed levels of contributions and benefits were dismissed as impractical, especially his idea of having his new scheme accumulate a large fund: if there were a margin of contributions over benefits, 'the most determined efforts will be made both in Parliament and outside to reduce the contributions or to increase the benefits'. There would be resentment on the part of those of similar economic status who were excluded from the new scheme with its higher benefits (for example, the self-employed): they would demand 27 28 29 30

Quoted in Gilbert, Churchill, vol. V, pp. 7 3 , 7 4 . Addison, Churchill, pp. 2 3 6 - 7 . Chamberlain to Ida Chamberlain, 28 March 1925, N C 18/1/479. Diary, 26 Nov. 1924, N C 2 / 2 1 .

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that the non-contributory scheme's pension levels be raised. The Anderson Committee looked with dismay at Chamberlain's proposed maximum old age pension level of 25s Od per week, and widows' pensions of 15s Od per week: 'The maximum would be the standard, and the provision of such a pension would at once raise the presumption that the current scale of free pensions was inadequate and would stimulate a demand for a revision of the scale of such pensions in an upward direction.' Thus the new pensions could only be 10s Od per week.31 An important hurdle that had to be overcome was the raising of the necessary money from a budget that balanced after the proposed tax cuts. Strategically, the Chancellor had earmarked a pruning of naval expenditure as the necessary precondition for an expanded pension scheme. But here he came up against the opposition of the Admiralty, which believed that Japan posed a serious naval threat in the Far East. W. C. Bridgeman, First Lord of the Admiralty, had wanted a substantial three-year programme of cruiser-building and was prepared to argue his case forcibly. It is one of the many oddities of the history of pensions in Britain that at one point the crucial Act of 1925 hinged on arguments over the possibility of war with Japan, but Churchill, as a former First Lord of the Admiralty, was an adept negotiator and agreement was reached.32 One consequence of these overall budgetary constraints, however, was that they finally killed off Chamberlain's idea of fixing his new contributory pension at a level higher than the 1908 one, 33 though it is hard to see how this idea could have been effected, since (as the Anderson Committee had repeatedly warned) it would have immediately encouraged exactly what the 1925 Act was partly designed to forestall - demands that the non-contributory pension be raised. As the date of Churchill's budget drew closer, therefore, the planning for the new pension scheme reached its conclusion. In March and April 1925, Chamberlain and his Ministry of Health officials were hard at work on the bill, full of glee at the prospect of pre-empting the Labour Party on the issue of social reform: 'We shall have given the pensions which the Labour Party only talked about'.34 The new scheme would also be popular within the Conservative Party, since it would cost relatively little, and would be welcomed by those older workers who would immediately benefit from it without having had to contribute all their working lives. 31

32 33 34

Committee on Insurance and Other Social Services. Third Interim Report. Examination of Certain Proposals Relating to Contributory Pensions (9 Feb. 1925), esp. pp. 5, 12, PRO PIN 1/3. Gilbert, Churchill, vol. V, p. 7 4 - 8 . Neville to Hilda Chamberlain, 1 Feb. 1925, N C 18/1/471. Neville to Ida Chamberlain, 28 Mar. 1925, N C 18/1/479.

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The final inspection of the bill was undertaken by a cabinet committee (including, inevitably. Sir Alfred Watson), which met in early April. There were a number of complex actuarial and technical questions (such as what arrangements to make for those who moved out of 'insurable employment' but wished to continue paying voluntary contributions)35 but the background work had been thoroughly done, and the cabinet committee concluded its work quickly. Thus when the full cabinet considered the proposals on 22, 27 and 29 April there was little discussion. The importance of the measure to all concerned is indicated by the extreme secrecy under which the proposals were shrouded, Baldwin even having to reprimand his cabinet when a very minor leak to the press took place36 - and thus when Churchill rose to deliver his budget speech at 3.30 p.m. on 28 April 1925, the effect was, in Chamberlain's words, 'truly sensational. No one had any idea that our plans were so far advanced and the Labour Party are filled with gloom at the thought of the opportunity they have missed'.37 In the budget speech, Churchill portrayed contributory pensions as bringing new security to the worker. The scheme had to be contributory because of the inevitability of rising costs brought about by an ageing population: to ignore such fiscal caution would result in 'an overburdened Treasury, fettered Parliaments, and a dependent people'. Even with the restraints of the contributory principle, after thirty-five years the new scheme would be costing £21,000,000, and the 1908 scheme £56,000,000 - a total of £77,000,000. 'Are we justified in laying these charges upon posterity?', asked Churchill. Labour speakers grumbled loudly over the contributory principle, and over the tax cuts for the rich, but could offer no real alternative.38 Clearly, the Labour leadership was beginning to sense a trap, for on the following day Philip Snowden denied that he had approved the Anderson Committee's second report before he had left office. He firmly stated that he was against any social policy that demanded contributions from working people: 'That has always been the position of the Labour Party', he declared.39 The trap was expertly sprung on 18 May, when Neville Chamberlain began his speech in the Commons introducing the second reading of the Widows', Orphans' and Old Age Contributory Pensions Bill. He 35

36 37 38 39

Widows', Orphans' and Old Age Contributory Pensions Bill. Financial Government Actuary, 4 April 1925, P R O C A B 2 7 / 2 7 6 . Cabinet 2 2 ( 2 5 ) , 27 April 1925, P R O C A B 2 3 / 5 0 . Diary, 1 May 1 9 2 5 , N C 2/21. HofCDeb., 5s, vol. C L X X X H I , 28 April 1925, cols. 7 1 - 9 . Ibid., 29 April 1 9 2 5 , cols. 1 8 0 - 1 .

Statement

by the

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taunted the Labour front bench, citing an election pamphlet by Snowden, in which Snowden had promised a new pension scheme commencing at the age of 65 for the elderly, widows and orphans. Repeatedly, he asked Labour to declare whether their proposed scheme would have been non-contributory (and thus prohibitively expensive) or - as he claimed - contributory, and on the lines suggested by the Anderson Committee. 40 This was a typical Chamberlain tactic, delivered with the thinly veiled contempt for his political opponents that made him unpopular on the opposite side of the House. And it was followed up in the Commons the next day with a similar attack on Labour by Sir Laming Worthington-Evans (Secretary of State for War, and a former Minister of Pensions) who, Chamberlain recorded with relish, 'turned the knife round and round in the wound until they simply squirmed'. But Chamberlain believed Labour's attitude to be hypocritical - to him they were 'a thoroughly dishonest lot' - for he claimed he had heard that John Wheatley, when Minister of Health, had privately declared himself in favour of a contributory scheme; even more damning was the alleged remark by Arthur Greenwood that 'only the general election saved us from having a contributory scheme ourselves'.41 All this was good knock-about politics, which left the Labour front bench in disarray. Chamberlain then went through the arguments in favour of his scheme. First and foremost, it would be far cheaper than a tax-funded, non-contributory scheme. Mindful of his more cautious backbenchers, Chamberlain presented the measure as quintessentially Conservative. There would be an extra burden on industry of £10,250,000 per annum in the form of employer contributions, but 'every employer will agree that the psychology of the workman has a very marked effect upon his output, and that one will always get better results when men are satisfied and contented than when they are restless'. The new scheme would thus strengthen the hallowed Conservative virtues of independence and self-reliance among the working class: it would 'complete the circle of security for the worker' begun with unemployment insurance, health insurance and workmen's compensation. 42 But Chamberlain also presented the bill as a signpost to the 'New Conservatism'. In an emotive introductory passage, he portrayed his party as caring for the weak and vulnerable in society in a way that more than matched Labour's claims: 40 41 42

Ibid., vol. CLXXXIV, 18 May 1925, cols. 7 3 - 8 5 . Neville to Ida Chamberlain, 23 May 1925, N C 18/1/487. HofCDeb., 5s, vol. CLXXXIV, 18 May 1925, cols. 90, 92.

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The very title of this Bill conjures up at once scenes of tragedy and of pathos, of sudden bereavement, of children deprived of their natural protectors and guardians, of failing powers in men and women who were once strong and vigorous and now, as old age has come upon them, have become helpless and dependent upon others.43 Chamberlain was no doubt privately disappointed that the level of the pension was not the 15s Od per week recommended by his own committee. But he must have been persuaded by the Anderson Committee's warnings on this, for in parliament he gave a vigorous but somewhat unconvincing justification for keeping the level at 10s Od. He as much as admitted that the weekly sum of 10s Od per week for a single person, and £1 for a married couple, would be insufficient to live on; but it would be enough to encourage retirement from a full-time job, and the pursuance of part-time work.44 Faced with such a well-orchestrated parliamentary onslaught, Labour speakers could not put up a very convincing opposition. They found themselves in a rather surprising alliance with a few right-wing Conservative backbenchers who objected to the extra burden thrown upon industry by the new employers' contributions. The main point of criticism of Labour MPs was over the contributory principle but, as has been seen, the ground had been cut from under their feet on this issue: privately, Labour leaders were acutely embarrassed over their party's failure of nerve a year earlier. John Wheatley's parliamentary protests that the new scheme would put a heavy burden on industry sounded unconvincing when many of his left-wing backbenchers frequently argued that industry's ability to pay should be disregarded.45 The really prescient criticism made by Labour speakers was that the Chamberlain scheme would encourage employers to impose wage cuts on older workers equivalent to the value of the pension - a concern that was to grow over the subsequent fifteen years, until it was to form the central dilemma of Labour on the pensions question. All in all, therefore, the Widows', Orphans' and Old Age Contributory Pensions Bill passed through parliament relatively easily, earning plaudits for its principal creator. The 1925 Act The funding mechanisms and administrative arrangements for the 1925 Act were exceedingly complex, and can only be summarised briefly here.46 The scheme was based upon the National Health Insurance 43 46

44 45 Ibid., col. 73. Ibid., col. 90. Ibid., col. 104. Even the summary in Wilson and Mackay's classic study takes up four densely packed

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system: it could thus be slotted into an existing administrative machinery, and eligibility by past contributions could be quickly established (which was politically advantageous). All wage earners earning less than the National Health Insurance income limit of £250 per annum, and credited with at least five years' continuous contributions prior to the commencement of the scheme, were covered. Contributions were fixed at a level that would fund benefits for a 16-year-old entrant. (For a man, these were ^Vid each from employer and employee; for a woman, 2V2d from employer, and 2d from employee.) All those above that age had their benefits funded by current contributions and by a considerable Exchequer subsidy (or 'back-service' charge). Technically, the scheme began with a massive capital liability of about £650,000,000 at 4 per cent interest. The Exchequer subsidy was paid into a 'Treasury Pensions Account', and was a fixed payment of £4,000,000 per annum. Thus although it was not a tripartite insurance contract, in that there was - controversially - no weekly contribution from the state (only an employer's and an employee's one), the cost to the Treasury was predicted to rise. This would be offset by savings on health and unemployment benefits (which henceforth ceased at age 65), on the falling annual cost of war pensions (from estimates of £67,000,000 in 1925-6 to £10,100,000 in 1965-6: significantly, these had always cost more tn^n the state old age pension scheme). Contributory pensioners received the new pension between the ages of 65 and 70, with no means tests. They then proceeded to the 1908 non-contributory pension, still at 10s Od per week, but with no means tests: these were received 'by virtue' of the 1925 Act. (Widows' and orphans' benefits were paid from 4 January 1926; 'age 70' pensions from 2 July 1926; and 'age 65-70' pensions from 2 January 1928.) Gradually, the contributory scheme would supersede the non-contributory one, assisted by decennial increases in contributions (only one of which actually took place - in 1936). Thus a 16-year-old entrant in 1926 would pay 20 per cent of the cost of the pension at age 70; one in 1936 would pay 55 per cent; one in 1946, over 80 per cent; andfinally,a 16-year-old entrant in 1956 would pay the whole cost. However, by this date there would still be many in the scheme above the age of 16 who would have to be funded by the 'back-service' charge. Only by the early twenty-first century might the scheme be fully funded. Wives not in insurable employment who were aged 65 received their chapters. See Sir Arnold Wilson and G. S. Mackay, Old Age Pensions: An Historical and Critical Study (1941), chs. 10-13. Information on this and subsequent paragraphs from this source, and from Widows', Orphans' and Old Age Contributory Pensions Acts 1925-1932. Report by the Government Actuary (1935).

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pension by virtue of their husband's contributions, but only when their husband reached pensionable age. Since the scheme was based upon labour market participation, this was the only way cover could be extended to dependent wives. Women thus gained, but at the cost of a reinforced dependency upon a male breadwinner. In terms of riskpooling, the greatest losers were single men, since they saw most of their contributions going to other beneficiaries (the widows, orphans, and dependent wives of other men). By 1933, 446,000 men and 264,000 women were receiving the '65-70' pension, plus 423,000 widows and 277,000 orphans. Frustratingly, 'by virtue' pensioners aged 70+ were included in the financial returns for the non-contributory 1908 pension (still administered by the Customs and Excise Department). An interesting aspect of the Act was that the liability of employed persons over the age of 65 to pay contributions ceased, but their employers still had to pay contributions: this was explicitly done to prevent the preferential employment of older workers.47 The political urgency of outflanking radical demands for a universal, tax-funded pension had thus created a distinctly odd scheme, which in practice broke all the rules offiscalvirtue preached so assiduously by its chief creator, Neville Chamberlain. It was transparently 'pay-as-you-go', with all kinds of concessions made to new entrants (such as the 'pre-Act widows') as political sweeteners. As the economist W. B. Reddaway later observed, no self-respecting insurance company would have contemplated it. It neither followed the true insurance principle of adjusting premiums according to the value of prospective benefits, nor the 'social service' principle of payment according to ability.48 The Treasury made gloomy noises about the huge capital liability it had undertaken. But in truth it was enormously relieved that what had emerged was much cheaper than possible alternatives, and had permanently contained the cost of state old age pensions. In the development of state pensions in Britain, the events of 1919 to 1925 were extremely complex and have had to be recounted in detail in order to do justice to the intricate interplay of political, economic, social and administrative factors. We should note that at no time was there any serious controversy about the need for pensions. The world of the 1920s was very different to that of the 1890s, when conservatives could argue that the impoverished elderly should take the consequences of their apparent fecklessness and inability to save in their past lives. A variety of factors had rendered such a view politically untenable - in particular, 47

48

C P 204(25): Improved Old Age Pensions and Pensions for Widowed Mothers. Memorandum by the Minister of Health, 18 June 1925, PRO CAB 27/276. W. B. Reddaway, 'Preface', in Wilson and Mackay, Old Age Pensions, pp. xii-xiii.

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the pressure of mass democracy, the increasing power and confidence of the labour movement, organised lobbying by pensioners and the slow spread of retirement among a growing number of old people. (By the mid-1920s, the proportion of males aged 65+ still formally classified as 'gainfully occupied' had fallen to 55 per cent.) In any case, the Ryland Adkins Report had revealed a powerful consensus of evidence on the utter irrelevance of moralistic factors in explaining old age poverty, particularly in its feminised form. The controversy of the 1919-25 period was thus over the level of pension, its qualifying conditions and, in particular, how it should be funded. These questions were crucial to the management of post-war capitalism, and formed the terrain of a fierce political battleground. As we have seen, throughout this period radicals demanded a universal, tax-funded pension for all aged 60 or over, with no means tests and at an 'adequate' level (by which was usually meant £1 per week). But to those who considered themselves fiscally responsible, this was a nightmarish prospect, raising the annual pension bill from under £20,000,000 to over £200,000,000. Pension funding thus became the litmus test of whether the British state could absorb, contain and render harmless the radical challenge from organised labour that had grown steadily since the 1880s and had been made even more potentially dangerous by the 1918 Representation of the People Act. Indeed, the period 1918-25 was probably the most important in the evolution of British welfare policy, witnessing a concerted and ultimately successful civil service strategy of containment. The battle was fought on several fronts and over several demands - 'secondary education for all' through a massive expansion of scholarships and free places, mother's pensions, family endowment, council housing for all the working class, a state medical service, a social security/job creation strategy that would provide 'work or maintenance' and universal, subsistence old age pensions. Of these, old age pensions were the potentially most expensive, and thus the shift from contributory to non-contributory funding was crucial to this wider strategy of containment. It is against this background that one must summarise the arguments on either side. Non-contributory benefits The principle that state benefits should be non-contributory was the vital economic underpinning of the 'citizenship' pension long demanded by radicals in the labour movement. The political left in Britain had always been deeply suspicious of the contributory principle, seeing it as a regressive poll tax designed to avoid redistribution from rich to poor:

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since contributory funding of pensions was in reality a 'pay-as-you-go' system, contributions were flat-rate taxes by another name. Labour radicals scoffed at the argument that contributory benefits carried a firmer legal entitlement than non-contributory ones, since, they argued, governments could manipulate the insurance contract whenever they liked by altering the conditions, duration and level of benefit. For example, in a recession benefits could be cut in order to facilitate wage reductions, and this could be spuriously justified by the need to lower contributions. Chamberlain's 1925 scheme was thus seen by them as a fraudulent distortion of the 'citizenship pension' principle: 'I submit that what the right hon. Gentleman has done here is merely to take a popular label and use it as a description of a deceptive concoction', said John Wheatley, and another Labour MP's verdict was even more caustic: 'It suggests to me the case of a pick-pocket taking my watch and presenting me with it afterwards and thinking he has done me a good turn in the process.'49 The fact that the new scheme's aim was 'to make the working classes pay for their own poor, and to throw upon them the casualties of the capitalist system', as another Labour MP put it, 50 was particularly galling because of the tax cuts dispensed to the wealthy in Churchill's budget. Labour radicals argued that there was massive wealth in the upper classes that could be taxed and redistributed through welfare: according to authoritative estimates, in the 1920s the top 5 per cent of wealth holders in Britain owned 91 per cent of all marketable wealth,51 with the top 2.5 per cent of occupied persons aged over 20 holding about two-thirds of wealth.52 Even more telling was the estimate of income distribution made by the economist Colin Clark. According to Clark, in 1928 nearly one-half of all national income (£1,665,000 out of a total national income of £3,673,000) went to the top 10 per cent of income earners (2,080,000 earners) who earned more than £250 per annum (the National Health Insurance income limit); the remaining half of national income was shared among the 90 per cent (18,065,000 earners) who earned less than £250 per annum.53 The debate between 49 50 51

52

53

HofCDeb., 5s, vol. CLXXXIV, 18 May 1925, cols. 95, 317. Ibid., col. 358. This point is stressed in Lynda Mountford, 'The Debate Within the Labour Party on the Contributory Principle as an Instrument of Social Policy 1 9 0 8 - 1 9 3 1 ' (University of London (LSE) Ph.D. thesis, 1984), p. 332, appendix 2. In ch. 7 Mountford provides an interesting discussion of the 'contributory versus non-contributory' issue. A. M. Carr-Saunders and D. Caradog Jones, A Survey of the Social Structure of England & Wales (1937 edn)3 p . 109. Colin Clark, The National Income 1924-31 (1932), p. 76. According to another estimate for 1938, the top 10 per cent of income earners took 38 per cent of pre-tax incomes. See Richard M. Titmuss, Income Distribution and Social Change (1962), p. 38.

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contributory and non-contributory pensions was thus really a debate about the degree of wealth and income inequality that should pertain in British society. Radicals were distinctly unimpressed by the 'moral hazard' arguments used by politicians as diverse as Neville Chamberlain and Lady Astor to condemn a 'free' pension paid for by other taxpayers, seeing these arguments as self-interested, class-based and hypocritical. They maintained that large amounts of taxpayers' money frequently went in handouts to the wealthier classes - as in the compensation paid to the railway companies after the First World War, or in the generous pensions paid to High Court judges. They ridiculed Neville Chamberlain's tendency to portray the case for the contributory principle as some kind of morality play. The lavish lifestyles of Conservative cabinet ministers rendered such sentiments distinctly hypocritical, since they protested their own incorruptibility in the face of the largesse of inherited wealth and other massive occupational benefits. To Labour MPs, a striking personification of this was Lord Birkenhead. Birkenhead received a pension of £5,000 per annum in reward for his services as Lord Chancellor in Lloyd George's coalition government, but was required to give this up on becoming a cabinet minister (Secretary for India) in 1924, again on a salary of £5,000 per annum. Under a new ruling, cabinet ministers were not allowed to supplement their salaries from other sources, so Birkenhead also had to forgo his income from journalism (£10,000 per annum). After strenuous protests by him, the chairman of the Conservative Party discreetly arranged for £10,000 from party funds to be paid to him as compensation for loss of his pension.54 Birkenhead's lifestyle was hardly an example of the values of frugality and thrift that Chamberlain was trying to instil in the working class.55 To more perceptive Labour observers, the shift to contributory funding was not only a gigantic confidence trick played by the Conservatives for political advantage; it was also part of a broader economic strategy designed to deflate the economy, reduce public expenditure and create the conditions in which private capital could be freed up to move into more profitable areas of investment. It is worth remembering that throughout his tenure at the Ministry of Health, Neville Chamberlain was involved in a long battle with high-spending Poor Law Boards of Guardians whose generous relief payments challenged the low-wage sector and placed a rising burden of rates on 54 55

John Campbell, F. E. Smith: First Earl of Birkenhead (1983), pp. 7 1 7 - 1 9 . See Earl of Birkenhead, The Life of F. E. Smith, First Earl of Birkenhead (1959), esp.

p. 476.

Chamberlain, 'New Conservatism' and the 1925 Act

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56

local businesses. Chamberlain was determined to reduce Poor Law expenditure and strengthen the role of the central state in controlling relief. In 1923, for instance, he had received a deputation from Sheffield, which pointed out that the Vickers steelworks there had calculated that between 1913 and 1922 the cost per ton of steel attributable to the rates had risen from 4s Od to £1 14s Od.57 It is clear that Chamberlain saw the 1925 pensions scheme as assisting the reduction in rates (particularly in the case of widows) by raising the finance directly from the working class; indeed, he argued to the cabinet that the initial saving to the Poor Law would be £3,500,000, rising to £8,000,000 per annum.58 Contributory insurance thus gave the central state greater control over social policy funding. The contributory principle was seen as fraudulent because it placed a double burden on the working class: they not only paid a contribution out of their pay packets, but the employer's contribution would eventually be paid by them in higher prices or reduced future wage rises. As W. B. Reddaway commented, 'only the very simple-minded' would accept the thesis that the employers actually paid their own contributions.59 Apart from underwriting the back-service charge until the new scheme became fully self-funding, the state paid no contributions. Even worse, the Act's ingenious provision for a gradual tapering-off of the state's funding of the 1908 scheme (replacing it with more and more 'by virtue' pensioners aged over 70 funded by their own and their employers' contributions) meant that workers were to be increasingly deprived of what they had fought for and won in the 1908 Act. This point was made forcefully in the debates on the 1925 Act by the Labour MP, Frederick Pethick-Lawrence. He pointed to the increasing liability of 16-year-old entrants to pay for the cost of their 'over-70' pension, and concluded of the Act that: 'so far as it confers any benefits upon young men and women entering the scheme at the age of 16 it causes them to pay for the whole of those benefits which they receive and takes away from them benefits which they now obtain for nothing. Talk of feeding a dog on its own tail!' He also questioned the political morality of the state introducing a compulsory insurance scheme, into which the state paid no insurance contributions.60 An even more interesting and constructive criticism was made in the 56

57 58

59 60

F o r a discussion of this issue, see James E . Cronin, The Politics of State Expansion. War, State and Society in Twentieth-Century Britain (1991), pp. 9 4 - 5 . Dilks, Chamberlain, p . 3 3 0 . C.P.204(25): 'Improved O l d Age Pensions a n d Pensions for Widowed Mothers. M e m o r a n d u m b y the Minister of Health', 18 April 1925, P R O C A B 27/276. Reddaway, 'Preface', p . xiii. HofCDeb., 5s, vol. CLXXXIV, 18 May 1925, cols. 159-61.

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Commons by Hugh Dalton. As a trained economist, Dalton had prepared alternative financial estimates showing how the £42,000,000 in tax cuts for the wealthy <- 'thrown to the wolves by the Chancellor of the Exchequer' - could have been used to fund a non-contributory scheme, and one in which the widows' pension would have been double in amount. He claimed that, after savings from not having to pay benefits such as unemployment insurance, the net cost of such a scheme would have been only £21,000,000 in 1926-7, and £28,000,000 in 1936-7. 6 1 The exasperation felt by Labour radicals was heightened by the behaviour of their own Chancellor, Philip Snowden, who also gave back £40,000,000 in tax cuts in his 1924 budget and subsequently boasted that the Conservative Shadow Chancellor, Sir Robert Home, had 'said that the proposals which I [Snowden] had made for the reduction of taxation were just the proposals which the Conservative Party had been yearning for years to carry into effect'.62 A final, and most important, point to note is that the shift to contributory pensions was in many ways a retrograde step for women. We have seen that one of the potentially radical aspects of the 1908 Act was that it was paid without reference to past labour force participation and hence benefited women, who formed a majority of pensioners. However, by basing eligibility on National Health Insurance contributory record (and hence labour force participation), the 1925 Act made sure that women would be a minority of claimants in the 65-70 age group - something which the Anderson Committee had fully anticipated. (To a limited extent, matters were remedied in 1940 with the lowering of the qualifying age for all women to 60.) The 1925 Act thus reinforced the economic dependency of women upon men. Since only some 10 per cent of married women were in insurable employment at any one time, the majority of them could only qualify for a pension through their husbands' contributions; they were thus viewed primarily as members of a family unit - a tendency that was to reach its apogee with the Beveridge Report's 'housewife's policy'. Whereas the 1908 Act had unwittingly given old women an independent income as of right, thus disaggregating the family income, the 1925 Act tied them closer to a male breadwinner. What some historians have called the 'engendering' of the welfare state63 was a direct outcome of the contributory principle which, in turn, reflected gender-differentiated labour force participation. Some would argue that this process of 'engendering' arose primarily from patriarchal motives: had the state really wished to see 61 63

Ibid., cols. 457-62.

62

HofCDeb., vol. CLXXXIII, 29 April 1925, col. 172.

Susan Pedersen, Family, Dependence, and the Origins of the Welfare State. Britain and

France, 1914-1945 (1993), esp. pp. 169-77.

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equality between men and women, the 1908 old age pension scheme would have been enlarged, rather than partially replaced. However, this study argues that, while gender was an enormously powerful perspective, shaping the consciousness of all actors in the policy-making drama, it was less important than class motives: the overwhelming attraction of the contributory principle was not that it increased the economic dependency of a housewife upon a male breadwinner, but that it minimised wealth distribution from rich to poor. (The question of why the labour market was gender-segregated is thus fundamental, but it must lie outside the scope of this study.) Finally, funding by contributory insurance opened up various anomalies (such as that of spinsters, considered fully in a subsequent chapter); the net effect was to divide and fragment the welfare clientele, thus reducing the possibility of concerted political action. The contributory principle However, the arguments outlined above had virtually no chance of success against the solid phalanx of power-brokers who were determined to shift pension funding on to a contributory basis. A major attraction of state contributory insurance was that it could be presented as merely a continuation of the funding mechanism pioneered by the working-class friendly societies in the nineteenth century. Social insurance could be presented as having arisen from the 'spontaneous' desires of ordinary citizens for protection through the 'risk-pooling' principle: it was 'good for people' and productive of social harmony to have benefits that had been 'paid for' and thus bestowed a firmer contractual entitlement. Such justifications were most notably voiced in the 1942 Beveridge Report, despite the fact that its author was not normally a sentimentalist when it came to analysing social problems and proposing remedies.64 Beneath such consensual statements, however, were rather more hardheaded justifications. As we have seen, Neville Chamberlain believed that 'the added security given to the worker is going to make him more contented and less restless'.65 Again, arguments on pension funding were inextricably linked to wider arguments about 'fiscal responsibility' in the inter-war years. The division between proponents of economic orthodoxy (favouring a deflationary economic strategy, cuts in public expenditure and low taxation 64

65

'Benefit in return for contributions, rather than free allowances from the state, is what the people of Britain desire'. Social Insurance and Allied Services, C m d . 6 4 0 4 , 1942, p. 11. Neville to Hilda Chamberlain, 5 April 1925, N C 18/1/480.

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levels, seeing the only real solution as a revival of the export trades) and proponents of a reflationary strategy (contra-cyclical public works schemes, a raising of domestic consumption, intervention in industry and increased social policy spending) was by no means simple, and often cut across party lines. Within the Labour Party, there was confusion on the question: though the most powerful advocacy of a reflationary strategy was to come from the left wing of the party, via the ILP's 'Socialism in Our Time' package of the mid-1920s, there was not always an obvious left/right division on the issue. For example, Tom Johnston, the Clydesider who was notionally on the left of the party, swithered between the two economic positions. Hence Philip Snowden's failure of nerve on the pensions question was not only a reflection of his devotion to fiscal orthodoxy of the most Gladstonian kind; it also symbolised deep uncertainty within the whole parliamentary Labour Party on the question of whether universal, taxfunded pensions (especially at ages 65 or 60) were economically practicable. Introducing such a scheme would add an enormous burden to the public expenditure commitment. To fiscal conservatives, this was economic madness. As we shall see, these considerations were finally to push the majority of the labour movement into a reluctant acceptance of the contributory principle in the 1930s. There was another argument in favour of contributory pensions, of an apolitical, technocratic kind. A major obstacle to the extension of taxfunded social policy in the inter-war years was the small tax base from which money could be raised. In 1925-6, a married man with a wife and three children would have paid no income tax (thanks to tax allowances) on a 'wholly earned' income (i.e. no income from investment) of £350 per annum. By £500 per annum, he would only be paying 2.0 per cent of his income in tax, and by £1,000 (the salary of a university professor) he would be paying only 8.1 per cent.66 There was thus a limit on the level of resources that could be levied on such a small section of the community: unless accompanied by a political revolution (involving massive confiscation of wealth), there would be widespread tax evasion by the rich. National Health Insurance was limited to wage earners earning less than £250 per annum, and thus the rich were excluded from it; they could argue that they paid into it via income tax revenue funding the state's contribution (which, in the case of the new contributory pensions, was a hefty initial Treasury subvention). Extending income tax downwards would be politically very

Figures from Carr-Saunders and Caradog Jones, A Survey, p. 151.

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difficult. Quite simply, the British working class did not pay income tax, and did not expect to have to pay income tax. The scope for raising additional revenue from indirect taxes was limited, especially in a recession when purchasing power was diminished.67 Thus a powerful apolitical argument in favour of state social insurance was that it was the only way of raising the necessary funding for social policy expansion. There was also an important strategic element in this argument: the inherent limitations of social insurance could be used to head off demands for radical, redistributive, tax-funded social policies. In the case of pensions, it is clear that the shift to contributory funding was designed to build a protective wall round the scheme, insulating it from demands that the pension should be raised to the level sought by radicals on the left. As the ex-civil servant Sir John Walley has recorded, in a revealing passage, failure to effect the shift to contributory funding in 1925 would have had 'incalculable consequences not only for the future of our social security but for our taxation structure, our capacity to finance the social services, and also for the development of occupational pension schemes, for which the 1925 Act gave the signal'. In another publication hefranklyacknowledged that the 1925 Act 'helped ministers to contain the rising Exchequer cost of the Asquith pension and provided them with a new argument in resisting political pressure for its enlargement'.68 The value of the contributory principle as a political weapon was perfectly illustrated when Neville Chamberlain received a deputation from the National Union of Societies for Equal Citizenship (led by Eleanor Rathbone) on 8 June 1925, making various criticisms of the 1925 Act's provision for widows and orphans, particularly the level of pension. With exquisite politeness, Chamberlain said that he wished to correct 'a very fundamental misunderstanding' about the new scheme. Some critics spoke of it, he said, as if it were a scheme for giving state pensions to old people, to widows and to orphans. But this was mistaken: 'It is not a state pension. It is an insurance scheme and it must be regarded, therefore, as an addition to the income of people who receive it which has been earned by the premiums paid by the insured person.' Chamberlain did not deny that the widows' and orphans' pensions were too low, but improving the scheme was impossible: 'It is purely a matter of finance, nothing else . . . when we came to look into 67

68

See Cronin, The Politics, p. 1 1 1 , o n h o w deeply the low-tax philosophy was embedded in political attitudes. Walley, Social Security, p. 6 1 ; Walley, T e n s i o n s Reform', in William A. Robson and Bernard Crick, The Future of the Social Services (1971 edn), p. 150.

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the calculations given to us by the Actuary we felt it could not be done.' 69 The Treasury's strategy had been successful: the funding of pensions had been diverted into much safer waters. 69

Memorandum, 'Ministry of Health. Monday 8th June 1925. Deputation re Pensions Bill', PRO PIN 4/98.

Pan III

The debate on retirement pensions

10

Labour and retirement pensions in the late 1920s

Introduction By the middle of the 1920s, the British labour movement had become very interested in retirement pensions as a means of effecting an immediate and simple cure for unemployment. At a stroke, it seemed, elderly workers could be removed from the labour market, and their jobs redistributed to the young. As in the pensions debate of the late nineteenth century, the dominant paradigm reflected labour market imperatives in that it was highly masculinist, focusing on the unemployment of the young male breadwinner, rather than on the poverty of older women. The older male worker, 'worn-out' after a lifetime of industrial service to the nation, could be granted an 'honourable retirement' through the payment of a 'citizenship' pension at a level that would guarantee reasonable material comfort. Such a pension would be deemed part of the value of labour in youth and middle age. Simultaneously, the young unemployed with families - who were perceived to be the most tragic victims of the economic recession would be given jobs, a decent income, and thus self-respect in a culture where self-esteem came from the work experience. This seductive argument was to dominate discussion on pensions in the fifteen years after 1925. By the mid-1920s, many Labour Party and trade union leaders were becoming attracted to the idea of job redistribution by removing both young and old workers from the workforce. In 1921, there were an estimated one million young people under the age of 16 engaged in the labour market whilst, at the other end of the age range, there were about a million and a half workers aged 60 and over. It was becoming quite apparent that unemployment (totalling roughly a million and a half) was striking with greater intensity at older workers: a 1923 Ministry of Labour survey of claimants to unemployment benefit had found that, whereas 15.4 per cent of gainfully occupied persons were aged 55 or over, fully 19.3 per cent of male claimants were aged 55 or 227

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over.1 If steps could only be taken to 'de-mobilise' from industrial service both the youngest and oldest, then jobs could be redistributed to young adult unemployed whose plight was the most pitiable, especially where they had families to support. The longer that the economic recession continued, the more the idea spread through the ranks of the labour movement. By 1927, retirement pensions were being discussed at the Labour Party Annual Conference. J. R. Clynes, on behalf of the executive, moved a resolution on the need to attack unemployment by a number of measures, including the establishment of a National Employment and Development Board, training schemes, encouragement of emigration, raising the school leaving age to remove juveniles from the labour force, and improving old age pension provision 'so as to restrict the number of workers needing to seek employment'.2 At this stage, therefore, it seemed tantalisingly obvious that a significant reduction of unemployment, and all the social misery that accompanied it, could be engineered by removing the old and young from the workforce. In arguing this case, Labour leaders stressed that not only would such a move benefit industry by concentrating production in the hands of the 'efficient' workers, it would also improve the happiness and economic security of those henceforth excluded from work: young people aged 14 to 16 would stay on at school and emerge better qualified; older workers would be offered an 'honourable retirement' on a 'decent' pension after a lifetime of service in industry. As the argument went: 'Every year about 400,000 young children, inadequately educated and inadequately trained, are brought into the labour market; while at the other end there are hundreds of thousands of aged persons who are compelled by poverty to struggle for employment.'3 Thus when giving evidence to the 1927 Blanesburgh Committee on unemployment insurance, four members of the TUC General Council (Arthur Hayday, Arthur Greenwood, Ernest Bevin and Miss Horam) presented this strategy as a logical development of long-term historical trends, and as the extension of the rights of 'citizenship' to a larger and larger section of the population. During the previous century, they argued, the productive capacity of industry had increased more rapidly than had the rate of population growth; thus, gradually, certain groups (notably child workers) had been excluded from the rigours of employ1

2 3

Labour Party, 'On the Dole - or Off: What to Do with Britain's Workless Workers (1926), pp. 5-7. Report of the Twenty-Seventh Annual Conference of the Labour Party, 1927}p. 221. Draft 1929 Labour general election manifesto, Labour's Appeal to the Nation, George Lansbury Papers, vol. XIX, British Library of Political and Economic Science.

Labour and retirement pensions in the late 1920s

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merit. 'We believe that the time has arrived to dispense with the economic services of further classes', they declared, adding that thereby economic activity would be concentrated in the hands of the most efficient workers.4 It was an argument that was presented as humanitarian; but it also marked the beginning of a process of implicit denigration of the older worker's worth that was to grow throughout the 1930s and reach a peak in the late 1940s. To this was added rather more self-interested motivations, one of which was to become an increasing concern among trade unionists in the following decade. Though never openly expressed as a motive, job redistribution to the young would have had a beneficial effect on trade union membership at a time when it was being seriously eroded. But there was another more powerful concern, voiced openly and with increasing indignation in the 1920s and 1930s: that, in the absence of a retirement condition, employers were using the existence of the old age pension to justify wage cuts to older workers. Immediately they attained the age of 65, workers found their weekly pay packets reduced by 10s Od. Capitalism was thus using older workers as a reserve army of labour, which undercut the wages and weakened the bargaining power of younger trade unionists. As we have seen, this question had been discussed in the late nineteenth century (notably, in the 1895 Aberdare Report),5 with classical economists issuing warnings: for example, the Charity Organisation Society had predicted that state old age pensions would eventually benefit employers, and that pensioners, if still permitted to work, would be used to undercut free labour.6 And the few trade union superannuation schemes that existed in the late nineteenth century usually took precautions against this danger by insisting that a recipient could not work at his normal trade - in effect, a retirement condition. Advocates of state pensions at TUC Annual Conferences in the 1890s and 1900s had grasped part of the argument, maintaining that pensions would shrink the reserve army of older workers that, by competing with the young, forced down wages; but at that time few went so far as to recommend a retirement condition.7 Planners within Whitehall during the 'all-in' insurance activity had occasionally discussed the problem, without showing much concern over it: for example, a civil service minute of December 1923 on the short-lived Baldwin administration's plans for a relaxation of mean-testing recorded 4

5 6 7

Report of the Unemployment Insurance Committee: Second Volume: Minutes of Evidence (1927), paras. 35-42. Report of the Royal Commission on the Aged Poor, vol. I, C-7684, 1895, p. lxxi. Old Age Pensions. A Collection of Short Papers (1903), p. 10. Interestingly (in the light of the events recounted in this chapter), one who did was George Lansbury. See Report of the Royal Commission on the Aged Poor, pp. lxxi-ii.

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that 'The pensions would operate as a subsidy to wages and in a time of industrial depression like the present would tend to depress the general wage standard.'8 However, the recession of the inter-war years gave the issue sudden urgency. By effectively abolishing means-testing for its beneficiaries, the 1925 Widows', Orphans' and Old Age Contributory Pensions Act had increased the possibility that workers aged 65+ would experience wage cuts equivalent to the amount of the pension. This issue was to pose trade unionists with a painful dilemma throughout the inter-war years: they sought higher pensions for old people, yet every hard-fought increase in pensions would bring about a corresponding reduction in the wages of an older worker and would encourage the undercutting of younger labour. Eventually, this might lead to a general attack on the entire wage structure at a time when, owing to falling membership and high unemployment, the trade union movement was weak and on the defensive. (TUC membership fell from over 8,000,000 in 1920 to half that amount by 1930.) Inter-war economic orthodoxy, as represented by the Treasury and by many employers, saw the solution to Britain's industrial ills as wage cuts (to lower production costs, and hence reduce the selling price of exports). To many trade unionists, this was an attack on the living standards of working people which should be at all times resisted. Systematic evidence of the extent of such wage cutting is impossible to obtain. As we shall see, the inter-war social surveys were conspicuously unhelpful on this question. But it is clear that an increasing number of complaints were being voiced from the mid-1920s onwards. Hence the Labour MP John Wheatley expressed concern in the parliamentary debates over the 1925 Widows', Orphans' and Old Age Contributory Pensions Bill: while protesting that 10s Od per week was grossly inadequate, he simultaneously warned that employers would portray it as a generous amount which could justify wage reductions to older workers. Another Labour MP uttered similar warnings regarding young widows who were employed, and suggested that a clause could have been inserted in the bill forbidding employers from imposing such cuts.9 At the 1928 TUC Annual Conference, Fred Hoey (of the Operative Plumbers' and Domestic Engineers' Union) moved a resolution instructing the General Council to take 'immediate steps' to stop employers cutting the wages of pensioners. Similar complaints were made at the Labour Party Annual Conference of that year: 'what is the 8 9

Memo, 'Proposed New Clause to the Finance Bill 1923: Old Age Pensions - Limit of Means' (n.d., c. Dec. 1923), PRO PIN 1/2. HofCDeb., 5s, vol. CLXXXIV, 18 May 1925, cols. 100, 149-50.

Labour and retirement pensions in the late 1920s

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use of increasing pensions while the other fellow controls the wages?', one delegate tellingly asked.10 Nevertheless, in the late 1920s this problem was not as widespread as it was to become in the next decade, and was thus obscured by the more immediate attractiveness of retirement pensions as a panacea for unemployment. In the run-up to the 1929 general election - in retrospect, a crucial election in deciding who would henceforth oppose the Conservatives - both Labour and Liberal parties increasingly identified unemployment as the key issue, and castigated Baldwin's administration for offering no radical measures to tackle the problem. The Liberals had worked out their proposals at a series of summer schools in the 1920s, and presented a final version in the Liberal 'Yellow Book' of 1929, We Can Conquer Unemployment. This offered a reflationary package of measures, including road building, railway electrification, and extension of the telephone service. In its 1929 general election manifesto the Liberal Party pledged itself, if elected, 'to find immediate employment for those now out of work' through public works schemes.11 Labour's position was rather more complex. A very radical reflationary package had been drawn up by the ILP in 1925-6, and had been presented to both Labour and TUC Annual Conferences. This, the 'Socialism in our Time' programme, comprised the nationalisation of banks, credit institutions, electricity supply, transport and agriculture, backed up by a 'living wage', and was part of an overt political challenge to the fiscal orthodoxy of the three ruling barons of the parliamentary party - Ramsay MacDonald, Philip Snowden and J. H. Thomas. Largely because of this element of internal political challenge, the ILP proposals were very unpopular with TUC leaders, who saw the 'living wage' as state interference with free collective bargaining. In the late 1920s, therefore, there occurred a strong counter-attack to the ILP proposals by more traditional-minded labour leaders. Their alternative proposals were outlined in Labour and the Nation (1927), which offered more moderate policies for dealing with unemployment. Among these was the rather unspecific statement that 'the disabled or aged worker, whose grip on the labour market has been weakened by physical enfeeblement, must be offered an honourable retirement, with an adequate pension'; there was thus to be a more generous scheme for 'the veterans of industry'.12 Labour's commitment was taken a step further in the Mond-Turner 10

11 12

Trades Union Congress Annual Report, 1928, p. 488; Report of the Twenty-Eighth Annual Conference of the Labour Party, 1928, p. 241. F. W. S. Craig (ed.), British General Election Manifestos, 1900-1974 (1975), p. 87. Labour Party, Labour and the Nation (revised edn., 1928), p. 19.

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talks of 1927-8. These were negotiations between a group of employers, led by Sir Alfred Mond, and representatives of the TUC General Council, led by Ben Turner, to find possible grounds of common agreement in the aftermath of the General Strike.13 As part of their remit, the Mond-Turner Committee looked at ways of tackling unemployment, and were immediately attracted to the idea of job redistribution. Their first task, they argued, was to fix the desirable ages for entrance into, and retirement from, industry: there existed a large number of older workers 'whose productive powers had passed their best and were still diminishing', with, at the same time, a mass of young unemployed. 'Nothing is more certain', the committee argued, 'than that in order to speed up industrial production, younger and more vigorous forces are required, and that for the more advanced technical developments the more adaptable labour of youth can give the best results'. By an improved retirement pension older workers should be persuaded to take 'a well earned rest from their work'. The pensions would have to be high enough to induce the genuine retirement of a sufficient number of persons aged 65+ still engaged in industry (excluding agriculture and domestic service). A small increase would simply lead to further wage cuts being imposed upon older workers.14 By the time of the 1929 general election campaign, therefore, the ILP's reflationary challenge was being successfully fended off by Labour moderates, who took up the cause of retirement pensions as one of the more acceptable of its proposals. With the election campaign fought principally on the Conservatives' record on unemployment, Labour made repeated pledges to take immediate steps to attack the problem by introducing a new retirement pension scheme and raising the school leaving age. Labour's reply to the Liberal Yellow Book was How to Conquer Unemployment (1929). It outlined the now-familiar package of measures - road building programmes, extension of electricity supply, afforestation, agricultural improvement, reorganisation of the coal industry plus the raising of the school leaving age to 15 and a scheme of pensions for industry's veterans, providing 'an honourable retirement with an assured income sufficient to maintain them under decent conditions'.15 Likewise, Labour's election manifesto placed much emphasis on unemployment as the central issue, and made a commitment to remove the 13

14

15

H. A. Clegg, A History of British Trade Unions Since 1889, vol. Ill: 1911-1933 (1985), pp. 464-71. Conference on Industrial Reorganisation and Industrial Relations, Interim Joint Report on Unemployment, Adopted by the Full Joint Conference on 12th March 1929 (1929), pp. 9-10. Labour Party,/Jow to Conquer Unemployment {1929), p. 17.

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16

young and the old from the labour market. There was a promise that 'a comprehensive co-ordination and extension of all the pensions schemes would be undertaken so as to give the opportunity to many classes of persons now excluded to come in'.17 Labour leaders made similar pledges during the election campaign: for example, at Gloucester on 23 May 1929, Ramsay MacDonald promised a raising of the school leaving age 'with an adequate allowance for maintenance', and improved pensions to grant older workers a well-deserved rest.18 Labour won the 1929 general election, but only as a minority government. Its total representation in the House of Commons amounted to 287 seats, as against the Conservatives' 260 and the Liberals' 59. Nevertheless, though hampered by the lack of an overall majority, Labour could still present itself as having a clear mandate to tackle the unemployment problem. It seemed, therefore, that there was an excellent chance that a new retirement pensions scheme would be implemented speedily. As in 1924, the time had come to discover whether Labour's words on the pensions issue could be matched by its deeds. The inter-departmental committee On assuming the premiership, Ramsay MacDonald appointed an InterDepartmental Committee on Unemployment. It was headed by J. H. Thomas, Lord Privy Seal in the cabinet and ex-leader of the railwaymen. By the late 1920s, Thomas had travelled rightwards across the Labour political spectrum - a path already well worn by the feet of several previous Labour leaders - and strongly supported the fiscal conservatism of the Labour Chancellor, Philip Snowden, and of MacDonald himself. The three men who comprised this powerful 'inner ring' within the Parliamentary Labour Party were not exactly the friendliest of colleagues - Snowden, for example, had a bitter hatred for MacDonald - but they saw each other as indispensable for Labour's success, and to each other's survival. Hence MacDonald would not even contemplate the loss of Thomas, whom he valued highly for his trade union connections. Snowden was still a Gladstonian Liberal in matters of finance: as Robert Boothby put it on one notable occasion, 'To every outworn shibboleth of nineteenth century economics he clung with fanatic tenacity. Economy, Free Trade, Gold - these were the keynotes 16 17 18

Labour Party Manifesto, Labour's Appeal to the Nation (1929). Quoted in Labour Party, Labour's Fight for the Old Folk (1942), p. 6. Memorandum, Tensions and Maintenance Allowances' (1929), George Lansbury Papers, vol. XXIX.

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of his political philosophy; and deflation the path he trod with almost ghoulish enthusiasm.'19 He was thus unreceptive to any plan for lowering unemployment that did not tackle what he perceived to be Britain's fundamental economic problem - the revival of the export trades. Matters were complicated further by the placing of the volatile Thomas at the head of the Unemployment Committee. Having risen from the humblest of origins he was, like several other members of the first two Labour governments, fatally dazzled by the trappings of social and political success. Gradually, he had allowed himself to become a prisoner of the temptations held out by the Establishment and, partly as a result, became increasingly disinclined to entertain radical solutions to the unemployment problem. In addition, the distractions of an overactive social life rendered him notoriously incapable of grasping new economic ideas; and he tended to conceal his incompetence beneath a hostile and blustering manner. The brilliant railwayman's leader has been forgotten by history; the shambling incompetence of 'Mr. Dress Suit, MP' - as the cartoonist Low cruelly portrayed him - is the image that endures. By contrast, the other members of the committee were interested in new ideas. George Lansbury, First Commissioner for Works, was on the left of the party and had established his credentials as a member of the Royal Commission of the Poor Laws, 1905-9, and as chairman of the Poplar Board of Guardians that had defied the Ministry of Health in the early 1920s over its generous scales of relief. Elected to parliament only in 1927, he found himself somewhat surprised to be given cabinet rank. But, as his biographer speculates, membership of the Unemployment Committee may well have fallen his way because MacDonald knew that, with Thomas in charge, disagreement, controversy and ultimate lack of any coherent policy outcome would be the committee's principal legacy.20 Lansbury would be too busy to cause trouble. The third member was Tom Johnston, Secretary of State for Scotland. One of the left-wing 'Clydesider' group in parliament, Johnston's radical credentials were impeccable: for example, he had been editor of the Glasgow socialist newspaper, the Forward, that had been suppressed by the government during the First World War. Finally, the fourth ministerial member was to prove the most con19

20

Quoted in Keith Laybourne, 'Philip Snowden: The Road from Leeds to the Lords', in Keith Laybourne and David James (eds.), Philip Snowden: the First Labour Chancellor of the Exchequer (1987), pp. 6 7 - 8 . See also Robert Skidelsky, Politicians and the Slump (1967), p. 67. Raymond Postgate, The Life of George Lansbury (1951), p. 245.

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troversial - Sir Oswald Mosley. From a wealthy and aristocratic family, Mosley was at the time considered a potential leader of the Labour Party; and, indeed, he was regarded as such by MacDonald, who held him in some paternal affection. Mosley had changed his allegiance from the Conservative Party to Labour in 1924. Shortly afterwards, he stood for Birmingham Ladywood in the 1924 general election, and came within only seventy-seven votes of defeating the sitting member, none other than Neville Chamberlain. Attracted to the ILP's ideas, he found himself in general sympathy with Keynesian reflationary strategies for dealing with the recession. Having entered parliament for Birmingham Smethwick in 1926, he was appointed Chancellor of the Duchy of Lancaster in the 1929 government.21 At this stage of his mercurial career - before his espousal of fascism Mosley had the reputation of being an able if dilettantish politician, fastrising and impatient with fools. 'Rich and ambitious son of a Tory baronet, with white teeth, metallic charm and a Douglas Fairbanks smile', was Raymond Postgate's acerbic comment.22 Clearly, he and Thomas were poles apart, both personally and politically. Thomas saw his colleague an an upper-class playboy, possessing little first-hand knowledge of the working class and flirting irresponsibly with the dangerous economic heresies of the ILR To many, there was something fundamentally suspect about a Labour politician who could entertain the aristocracy at his sumptuous country house one day, and tour the slums of Manchester the next. 'That young man has too much aristocratic insolence in his make-up5, Beatrice Webb noted uneasily at the time.23 To Mosley, on the other hand, Thomas was the epitome of the corrupt, bumbling trade union baron whose mind had long ceased to function in any kind of original way. There can be no doubt that the events of 1929-30 were to vindicate this view. When faced with the challenges and responsibilities of cabinet office, Thomas fell back on inaction and evasiveness, or relied wholly on his civil service advisors (particularly the highly conservative Sir Horace Wilson). Thus from the start, the Unemployment Committee faced two internal difficulties that constantly threatened to bring its work to a complete standstill. First, it was dominated by Treasury officials who opposed the whole strategy of contra-cyclical public works schemes and who lost no opportunity to compose pessimistic memoranda quashing 21 22 23

Robert Skidelsky, Oswald Mosley ( 1 9 7 5 ) ; Sir Oswald Mosley, My Life ( 1 9 6 8 ) . Postgate, Lansbury, p. 2 5 2 . N o r m a n and Jeanne Mackenzie (eds.), The Diary of Beatrice Webby vol. IV, 1924-1943 ( 1 9 8 5 ) , p. 184.

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the committee's periodic recommendations.24 Second, serious personality clashes frequently took place between Thomas and the other three members. For example, on 12 December 1929, MacDonald noted wearily in his diary: 'Visit from Mosley on behalf of Lansbury + Johnston + himself, saying how impossible to work with Thomas, + threatening resignation.'25 Both of these factors were to affect seriously the consideration of retirement pensions. Discussion by the four ministers of unemployment and its possible remedies involved the work of two related committees. The first of these was the notorious Inter-Departmental Committee on Unemployment. From its first meeting, on 11 June 1929, the proceedings of this committee degenerated further and further into farce. Initial discussions trod the well-worn path of road improvement programmes, expansion of colonial trade, railway extension, electrification and afforestation. But after some time, largely under Thomas's influence, the suggested remedies became more and more trivial - from the building of railway bridges to the celebrated discussion of wooden versus concrete telegraph poles. 26 The bankruptcy of Thomas's ideas was very evident when he addressed the Labour Party Annual Conference on 1 October 1929, and gave an appallingly vague account of the new government's steps to lower unemployment: in the course of a rambling speech he recounted the highlights of his recent trade visit to Canada, mentioned possible roadworks schemes, and so on; but, ominously, he warned that there were 'many difficulties' in retirement pensions. 27 The significance of the Inter-Departmental Committee for the history of pensions was twofold. First, its failure to come up with a large-scale coherent plan for economic revitalisation lent even greater importance to the strategy of retirement pensions as an immediate palliative to the unemployment problem, and gave Mosley, Johnston and Lansbury a heightened sense of urgency in their task. Second, its farcical proceedings proved a constant irritant to Mosley and led him finally to force a confrontation on the issue - from which there came his resignation as a cabinet minister. With this resignation there was removed from the centre of power the principal advocate of a reformed pension scheme.

24 25 26 27

Colin Cross, Philip Snowden ( 1 9 6 6 ) , p. 2 4 5 . Quoted in David Marquand, Ramsay MacDonald ( 1 9 7 7 ) , p. 5 3 4 . Minutes of the Inter-Departmental Committee on Unemployment, P R O C A B 2 7 / 3 8 9 . Report of the Twenty-Ninth Annual Conference of the Labour Party, 1929, pp. 1 7 6 - 8 0 .

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Labour's retirement pensions plan Of greater direct importance was the second committee - the 'Cabinet Committee on Retirement Pensions and School Leaving Age', nicknamed the 'old and young' committee. Appointed on 29 June 1929, this committee had the same ministerial membership as the InterDepartmental Committee, but worked much more efficiently: its first meeting was on 4 July; its final (thirteenth) meeting was on 13 November; its draft report was completed on 21 October and its final report on 26 November. Allowing for the parliamentary summer recess, this was an impressive performance, and the thoroughness of its working was evident in its final report. Initially, the committee came up with a scheme providing a new retirement pension of £1 (single) and 30s Od (couple) per week for all aged 65+, but in July this was dropped on the grounds of its £60,000,000 annual cost. As an alternative, Mosley suggested a temporary scheme of retirement pensions for workers aged 60+ in certain specified depressed industries: this was also abandoned on 17 September.28 Likewise, in July the cabinet somewhat pusillanimously decided that the raising of the school leaving age was an 'educational' issue, and hence should be excluded from the committee's remit.29 (Labour had a bill in preparation to raise the school leaving age.) It thus vanished into political oblivion until eventually implemented in 1947. Attention was thereafter focused on retirement pensions, and the committee investigated five possible schemes, outlining these in its final report to the cabinet. 'Scheme A' would have offered a 10s Od supplementary pension to all aged 65+, conditional upon retirement, on top of the existing 1908 and 1925 schemes. Its cost would be relatively cheap - £13,660,000, after savings on public assistance. Probably only some 185,000 men and women would retire, even with a retirement condition that would have to be quite draconian (the pension being permanently forfeited if the recipient ever returned to work, even occasionally). 'Scheme B' was, in effect, Mosley's now-abandoned plan for certain recession-hit industries - coal-mining, pig-iron manufacture, steel making and ship-building and was judged impractical because of the problems of limiting eligibility to those industries only. 'Scheme C was a bold 'emergency' plan for workers over the age of 60, covering all those eligible for National Health Insurance, plus railway workers (who, like agricultural workers and domestic servants, 28 29

Skidelsky, Mosley, pp. 1 8 4 - 5 . T h o m a s to Lansbury, 17 July 1 9 2 9 , George Lansbury Papers, vol. X I X .

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were excluded from national insurance because of the regularity of their employment), plus persons aged 65+ in receipt of the old age pension but who had not retired from work. The pensions under this scheme (£1 cto a man', 30s Od 'if he has a wife') were to be granted on condition of permanent retirement from work, to be withdrawn if the applicant ever returned to work again. A crucial feature of this scheme was the fact that it would be available for take-up for only six months, and thereafter applicants would be ineligible; thus its annual cost would fall from £21,600,000 in 1930-1 to £10,000,000 in 1935-6, because as pensioners reached the age of 65 they would then pass on to the 1925 contributory scheme, and all that would be needed would be a supplement to this of 10s Od per week. Indeed, after savings on unemployment benefit and Poor Law relief, the initial cost might be as low as £10,400,000. The committee estimated that there were 677,000 men and women aged 60+ still in insured employment (plus railways), of whom 390,000 would take up the scheme. This would probably create employment for 278,000 persons. Finally, the committee briefly offered two additional pension schemes. 'Scheme D' would have been a permanent version of 'Scheme C , but would therefore be prohibitively expensive (costing an estimated £42,000,000 by 1945-6). 'Scheme E' was a deferred permanent scheme for those aged over 65. 30 It was clear that 'Scheme C was the committee's favourite: it was allocated most space in the report, and an addendum to the report (significantly, not signed by Thomas) gave it strong support, pointing out that if it led to the creation of 250,000 jobs for the younger unemployed, the net cost to public funds in the first year of putting men to work would be £35 per man, as opposed to £200 per man under the existing public works schemes for the unemployed. It was equally clear that Thomas intensely disliked the whole business, and agreed with the civil servants on the committee who had placed themselves on record as attacking the special addendum. A retirement pension scheme, they argued, could never be a real cure for unemployment since it could never deal with the root of the problem the revival of Britain's export trade; there was no guarantee that jobs would be redistributed to the young; and the eligibility criteria would be contentious and difficult to enforce. Thomas took up these objections and fashioned them into a highly negative foreword to the report, adding the warning - a cardinal principle of inter-war Treasury orthodoxy - that taxation would have to be raised, and that this would inflate 30

D.U.(29)67: Cabinet: Inter-Departmental Committee on Unemployment: Report by SubCommittee on Retirement Pensions (Nov. 1929), PRO CAB 27/391.

Labour and retirement pensions in the late 1920s

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production costs in industry, making goods harder to sell on world markets.31 The committee's report was completed on 26 November 1929, and presented to the cabinet on 3 December, whence it was referred to a special cabinet committee of three ministers for consideration. In the weeks leading up to its completion, Lansbury, Mosley and Johnston had become increasingly desperate over Labour's inability to come up with measures to stem the steadily rising tide of unemployment (which had been 1,178,000 when Labour came into office in May 1929, and by December had risen to 1,344,000). Labour had, after all, placed unemployment above all other issues in the 1929 general election, and had boasted that no less than four senior ministers would be given the task of reducing it. By September 1929, Lansbury was writing to Mosley that 'I am really in despair about the whole business of unemployment. We all seem to be working in such an unco-ordinated manner . . . The one authority which does work is the Treasury, and whenever I hear Snowden - while I hate his conclusions, his logic seems to me unanswerable.'32 A month later he was imploring Thomas to support the proposed pension scheme as a fulfilment of Labour's election pledges: I n our manifesto we definitely promised to tackle unemployment by finding work, raising the school leaving age and retirement pensions, etc.', he argued; the committee's pension proposal was essential 'to meet the present very grave emergency', and would be relatively inexpensive.33 But even the most enthusiastic supporter of improved pensions had to recognise that there were enormous practical difficulties to be overcome. Ironically, the case for retirement pensions suffered by being placed in the context of the bitter debate within the labour movement on a cure for unemployment. Thus both left and right of the party saw it as tokenistic, concealing the fundamental structural problems in the British economy. Even an enthusiastic and tireless pensions campaigner like Rhys Davies MP could declare in 1930: Let us by all means pension the old warriors of industry as we do the heroes of the battlefields, but do not deceive ourselves by thinking that pensions or payments of any kind outside wages, either for the young34or old, can have any substantial effect on the disease known as unemployment. Enforcing a retirement condition was considered highly problematic: 31

32 33 34

C . R 3 4 1 (29): Cabinet: Report on Retirement Pensions. Note by the Lord Privy Seal (26 Nov. 1929), ibid. L a n s b u r y t o Mosley, 2 5 Sept. 1 9 2 9 , G e o r g e L a n s b u r y P a p e r s , vol. X I X . L a n s b u r y to T h o m a s , 2 3 O c t . 1 9 2 9 , ibid., vol. X X . Q u o t e d in C h r i s Phillipson, Capitalism and the Construction of Old Age ( 1 9 8 2 ) , p . 2 6 .

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there would have to be a ban on retirees performing any kind of work at all, which would be greatly resented - especially as, under 'Scheme C , even the most casual participation in the labour market (for example, odd days of work) would lead to permanent forfeiture of the pension. This was precisely the kind of work that old age pensioners tended to perform. Some individuals might, through ignorance or misunderstanding, fail to take up their entitlement within the stipulated sixmonth period, and to find themselves suddenly excluded would arouse in them massive resentment. Further bitterness might be felt by workers in excluded trades (agricultural workers, domestic servants, small shopkeepers, the low-income self-employed, etc.), or among those just too young to qualify. The accumulation of such criticism might force parliament to make 'Scheme C permanent, which, at £65,000,000 per annum, would be regarded as prohibitively expensive. In a hint of future debates about the 'burden' of dependency, it was pointed out that, on existing demographic trends, the ratio of persons of working age (aged 16-65) to pensioners aged 65+ was 4.43:1; were the normal retirement age reduced to 60 (with a retirement condition), this would worsen to 2.65:1 in 1929 and a predicted 1.66:1 by 1980.35 Finally, the greatest drawback was the question that was to bedevil all similar discussions in the 1930s: whether the exit of older men from the labour market really would liberate jobs for the young in the right trades and regions. The majority of those employed aged 65+ were in agriculture (which would have been excluded from 'Scheme C ) or were men employed on light or casual work. Of those unemployed who were aged 35 or under, most were unemployed for short periods; probably only about 80,000 were long-term unemployed, and most of these were concentrated in coalmining. Mosley, however, was determined to ignore these difficulties and press on. He argued that 'Scheme C , while offering no long-term solution to the unemployment problem, would still be an essential emergency measure of job redistribution which boasted many fiscal advantages since, as he put it: The more who accept the pension the more vacancies we create: the fewer who accept the pension the smaller the cost. To the extent that the inducement to retire is accepted the unemployment problem is solved. To the extent that it is not accepted balm is brought to the Exchequer. The cost is in direct relation to the results. At a stroke, he argued, the number of permanently unemployed would 35

Memorandum by Mosley, 'General Remarks', 2 Nov. 1929, George Lansbury Papers, vol. XX.

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be lowered by one-third, and the Unemployment Insurance Fund would be restored to solvency.36 However, the cabinet committee were much less enthusiastic, and no doubt strongly pressurised by MacDonald, Snowden and Thomas they considered the practical problems to be overwhelming. Though one member (W. R. Smith, Parliamentary Secretary to the Board of Trade) supported the pension scheme, the majority (A. V. Alexander and F. W. Pethick-Lawrence) produced a pessimistic report, repeating the standard objections: no genuine fresh employment would be created, nor would the productive capacity of the nation be improved; little was known of the likely results; it would prove much more expensive than anticipated, and would end up as a 'thinly disguised dole'; there would be considerable discontent among those excluded. The majority report of the committee thus recommended on 19 December that the scheme be dropped, and this was the decision that the cabinet took.37 There then occurred a polarisation of views that has become one of the most famous and symbolic episodes in the economic history of the inter-war years, and hence only needs to be related here briefly. Mosley put together a much more comprehensive package of proposals to lower unemployment and sent it in a memorandum to MacDonald on 23 January 1930. When Thomas discovered this, he resigned in protest at a junior minister going to the Prime Minister over his head on a matter with which he was closely involved; but MacDonald, anxious not to lose such a close colleague, refused to accept the resignation and instead reprimanded Mosley. In this atmosphere of bitterness and recrimination the Mosley memorandum was put before cabinet and rejected - whereupon, on 20 May 1930, Mosley formally tendered his resignation to MacDonald. A fuller version of the Mosley memorandum was published in July 1930 (also signed by John Strachey, Aneurin Bevan and A. J. Cook) and was presented to the Annual Conference of the Labour Party on 7 October 1930, where it was defeated by 1,251,000 votes to 1,046,000 on a card vote. The Transport and General Workers' Union block votes cast by Ernest Bevin were crucial in its torpedoing.38 On the face of it, the fiscal conservatism of the inter-war Labour Party had thrown out what could have been a dramatic innovation in pensions policy, lifting many old people out of poverty, offering them the chance 36

37

38

Memorandum, 'Recommendations of Policy by the Three Ministers' (22 Oct. 1929), George Lansbury Papers, vol. X X . C.P.366(29): Cabinet. Retirement Pensions Committee. Report, 19 D e c . 1929, PRO CAB 27/402. Reportof the Thirtieth Annual Conference of the Labour Party3 1930, pp. 200-4.

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of retirement on a generous pension and possibly effecting some reduction of unemployment. But the margin of the defeat was really quite narrow, and the vote could have gone the other way - so it is said - had the taxi of A. J. Cook (of the Miners' Federation) not been delayed such that he missed it.39 The rejection of the Mosley memorandum concealed the fact that retirement pensions continued to enjoy a solid constituency of support within the labour movement. When separated from the controversy surrounding Mosley (particularly, the distaste many felt for his brash ambition), the general idea found much more favour. For example, later in that very same Labour Party Annual Conference, H. E. Clay of the Transport and General Workers' Union (in Bevin's temporary absence) moved a resolution asking the National Executive Committee to press immediately for a pension of £1 per week for all elderly workers aged 65+ who left employment, and the conference approved this (even fixing the eligibility age at 60) by 1,096,000 votes to 850,000.40 Although Bevin opposed the Mosley memorandum, he nevertheless was to emerge as the key figure in Labour's campaign for retirement pensions in the 1930s. In a series of articles in The New Clarion, subsequently published as My Plan for 2,000,000 Workless (1933), Bevin advocated a new pension scheme of £1 per week (single) and 35s Od (couple), conditional upon retirement, to be offered (a) as an option to those workers aged 60+, and (b) to all aged 65+ who earned up to £1,000 per annum. This, he claimed, would release 600,000 jobs. Other proposals suggested by Bevin included the raising of the school leaving age to 16, a new invalidity pension, a shortening of the working week to a uniform forty hours, and special pensioner housing projects to be built by local authorities. The combined effect of all these proposals, he argued, would be to redistribute 2,000,000 jobs to the unemployed.41 It was ironic that, under the second Labour government, the cause of retirement pensions suffered by being attached to what at first sight appeared to be its strongest justifying argument: that job redistribution would be one effective and immediate way of tackling the unemployment problem. For this meant that it became caught up in the bitter factional politics of the labour movement. Two internal divisions were particularly important: first, the split between the advocates of reflationary, contra-cyclical economic policies and the proponents of Snow39 40 41

Cross, Snowden, p. 253. Report of the Thirtieth Annual Conference of the Labour Party, 1930, pp. 2 3 4 - 8 . Ernest Bevin, My Plan for 2,000,000 Workless (1933). Unfortunately, the Bevin Papers (Churchill College, Cambridge) contain nothing relevant.

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denesque economic orthodoxy (who viewed retirement pensions as expensive, fraught with practical difficulties and irrelevant to the real causes of unemployment); second, the clashes of personality and political style that were a product of the different class and cultural backgrounds of leadingfiguresin the labour movement. However, the labour movement's interest in 'adequate' pensions conditional upon retirement was to grow steadily in the 1930s, until by 1939 strong pressure was being exerted on the government. What blocked any practical developments in the 1930s was, of course, the economic depression. After the crisis of August 1931, the entire labour movement was seriously weakened as a political force and the recession gave the Conservative-dominated National government a strong motive to do nothing in the way of social policy innovation. Nevertheless, as we shall see, the tragedy of mass unemployment was to boost the case for retirement pensions.

11

PEP and retirement pensions in the 1930s: an ageing population

Introduction The 1931 economic crisis inaugurated a decade of relatively little progress in the making of social policy. Dominated by the tenets of fiscal orthodoxy, which saw the remedy to Britain's economic ills as tax cuts and reductions in public expenditure, the Conservative-dominated National government followed a policy of 'safety first' in social and economic management and commanded a huge parliamentary majority. In total, the National government won 554 seats in the 1931 general election, as against only 61 for all opposition MPs combined. The Labour Party was electorally and ideologically devastated by the events of 1931, its representation reduced from 288 seats in 1929 to a mere 52 (many of which were rooted in Labour's unshakeable base of coalmining). Some consolation could be gleaned from the fact that the National government's crushing majority was partly a product of the 'first past the post' electoral system - Labour's share of the total vote only fell from 37.1 per cent (1929) to 30.6 per cent (1931)1 - but the decline of the Liberal Party meant that forming a government demanded a higher share of the total vote than had been the case in the 1920s. Given the bleak economic climate, the possibility of innovation in welfare policy-making was remote (unlike the USA, where recession gave birth to the New Deal). But the hegemony of 'safety first' in parliament did not necessarily reflect public opinion as a whole, and the cause of social reform was kept alive in certain quarters. One of these was the broadly liberal ideological coalition that has come to be known as 'middle opinion'. As has been shown, retirement pensions enjoyed most forceful advocacy by the Labour Party and the trade unions in the late 1920s. But in the early 1930s a liberal-centrist version of the idea appeared, propagated most notably by the independent research group Political 1

BenPimlott, Labour and the Left in the 1930s (1977), pp. 16-17.

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PEP and retirement pensions in the 1930s

245

and Economic Planning. PEP, as it was commonly known, was founded in 1931 and became the leading spirit in the planning movement of the 1930s. The cataclysmic world economic crisis of 1929-31 had convinced many liberal economists that capitalism was in need of a major overhaul, and there arose from them a movement to create a more rational, planned economy that would work efficiently whilst at the same time protecting the weakest of its citizens through improved social services. Economic growth, it was believed, could be cultivated by longterm planning and re-structuring, and liberal social policies would act as an emolument to that process by creating social harmony. The planning movement of the 1930s, as represented by middle-class bodies like PEP and the Next Five Years Group, was an avowed alternative to socialism. It attempted a reconciliation between the polar opposites of corporatist state planning, on the Soviet model, and a liberal democracy, in which the free market flourished. The via media between these two extremes was not easy to think through, and some argued that corporatist planning was incompatible with democracy. For example, one reason why reflationary public works schemes failed to reach the realm of practical politics was that, if implemented quickly and hence successfully, they would have had to violate the rights of the individual: road building, afforestation and electrification schemes would have had to be undertaken without planning permission. Interestingly, by the mid-1930s there were expressions of unease that the emergence of new quasi-state bodies like the Electricity Commission (1920), the British Broadcasting Corporation (1927), the London Passenger Transport Board (1933) and the Unemployment Assistance Board (1934) were signs of a new and disturbing tendency in British social administration towards the creation of unelected, unaccountable public bodies (the 'quangos' of their day) that were beyond democratic control. Though primarily seeking a creative alternative to the economic pessimism of the early 1930s, the planning movement also sought to define a new middle way between these two extremes that would tip the balance towards private enterprise. As Harold Macmillan put it, 'The flamboyant appeal of the revolutionary must be opposed not by a negative attitude, but by constructive proposals which appeal to the reason and intelligence of the nation.'2 The search for one such 'constructive proposal' in the form of a new retirement pension scheme was to appear for a time tantalisingly hopeful; but in the end, the dilemmas inherent in the 'middle way' planning movement could not be resolved. 2

Harold Macmillan, Reconstruction: A Plea for a National Policy (1933), p. 129.

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The foundation of PEP PEP's origins lay in a series of informal meetings between like-minded professional people, businessmen and academics located in the metropolis. Their ideas formed the basis for a special issue of the liberalprogressivist journal, the Week-End Review^ of 14 February 1931, devoted to a 'National Plan for Britain'. The plan aimed at a 'fully coordinated modernisation within the context of British traditions and values', and suggested various institutional ways whereby this could be effected, such as the creation of a Bureau of Statistics and a Standards and Design Institute.3 The publication of this proposal acted as a catalyst, and on 22 March 1931 a meeting was held at University College, London, from which the actual organisation was formed. Participants at these first meetings included Sir Henry Bunbury, Oliver Roskill, Sir Ronald Davison, Professor A. M. Carr-Saunders, Sir Arthur Salter and, as eventual secretary, A. D. K. Owen. PEP's first chairman was the dynamic Israel Sieff, a director of the retail firm Marks and Spencer.4 Historians of the 1930s have long recognised the importance of PEP as a leading force in the creation of a reformist, 'middle way' consensus that grew in strength during the decade and, with the fall of the Chamberlain administration in May 1940, suddenly broke through to become the new political orthodoxy. PEP worked steadily throughout the decade, winning converts to its rational, reformist ideas by establishing research projects, publishing detailed reports on an enormous variety of topics, lobbying official bodies, holding meetings or conferences, and enlisting the support of a growing 'army of the great and the good' in politics and public life. Much of the immediate propaganda work was disseminated through its broadsheet, Planning - a monthly journal containing brief, readable summaries of problems and suggested policy solutions. In the social policy sphere, PEP's two most famous publications were its reports On the British Social Services and On the British Health Services (both

published in 1937) which expressed much of the collective wisdom of mainstream welfare reformers, anticipating by a decade the content of the 'Beveridge consensus' of the 1940s. As early as 1934, for example, the PEP Social Assistance Group were discussing the need for a complete overhaul of social insurance and assistance.5 3

4

5

Max Nicholson, 'Prologue: the Proposal for a National Plan', in John Pinder (ed.), Fifty Years of Political and Economic Planning (1981), pp. 5-8. Kenneth Lindsay, TEP through the 1930s: Organisation, Structure, People', ibid., pp. 9-17. Minutes of the Social Assistance Group for 24 April 1934, PEP Archives, WG 14/1, British Library of Political and Economic Science.

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The political tenor of PEP was liberal, reformist, rational and ostensibly non-partisan, steering a firm middle way between what were perceived as dangerous and threatening extremes of left and right. Change was to take place within the context of economic and social relations as they existed: PEP recognised 'that the merits of institutions and states of mind are relative', and it pressed for 'quick organic growth, consciously directed, as against stagnation or revolution'.6 Its claims were couched in terms of excessive modesty and reasonableness: it merely sought to remove 'friction in various parts of the machine industry, agriculture, finance, the social services, and so forth'. Or, as an editorial in Planning put it, 'We are simply trying to the best of our ability to assist in the process of replacing an unplanned by a more orderly society based upon democracy, and we claim the support of all who are ready to think and act in the same spirit without defeatism.'7 However, on closer inspection, the claims to political neutrality were a trifle disingenuous. PEP's central aim was to effect a modernisation of British capitalism and, at the same time, reduce the social tensions that might hinder this. 'Planning' was the bureaucratic method whereby the existing distribution and ownership of private industry would remain substantially unchanged, but conditions of growth would be created and internal political threats minimised. Put somewhat crudely, the founders of PEP had learned the lesson of modern democracies that capital accumulation best took place under conditions of social stability, and the latter required investment in social policies. As Israel Sieff wrote to A. D. Lindsay, A National government has stemmed off an impending crisis, but what next? There are tendencies at work today which are dangerous symptoms; one is a policy of drift and irresolution, the other is a sense of frustration of effort. If these tendencies are not checked and replaced by bold and constructive plans we shall inevitably be faced with alternative proposals of an extreme nature and hasty emotional appeals to the electorate; this would be fatal.8 Social reform proposals were thus confined within the parameters of this firm political centrism. Mass democracy demanded that economic progress would be slower than might otherwise be possible; but such progress would eventually come: If it were possible to return to laissez-faire to remove all obstacles to economic adjustment, to curtail trade union activity, to reduce unemployment relief and tighten up the conditions of its receipt, and to encourage lower wage policies, the workers might, in theory, be goaded into mobility and absorbed in old and new industries at lower wage levels. But it is clearly impossible to return to these 6 7

Planning: A Broadsheet Issued by PEP, no. 1, 25 April 1933, p. 2. 8 Ibid., no. 6, 4 July 1933, p. 14. Quoted in Lindsay, 'PEP', p. 18.

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conditions, and any attempt to do so would almost certainly precipitate bitter labour disputes and, in all probability, a calamitous political upheaval.9

Many of PEP's ideas were, in fact, striking in their unoriginality> having been borrowed from other sources and diluted into more widely acceptable forms. Much of its liberal-corporatist programme of the 1930s was a watered-down version of the ILP's 'Socialism in Our Time' package of ten years earlier, with the more radical policy options carefully excluded. For example, when considering the unemployment problem PEP did briefly acknowledge that 'one theoretical solution would be for the state to enrol labour by conscription in a wide range of nationalised industries'; but it quickly went on to dismiss the idea - 'We do not believe that such a solution would be desirable.'10 Given its central aim of revitalising the economy, it is not surprising that one of PEP's first areas of investigation was unemployment. Here, it seemed, was a problem presenting both those economic-dislocation and social-disorder symptoms that the magic of planning could tackle. Dominated by a reluctance to interfere with the organisation and ownership of industry, PEP turned its attention to the safer strategy of labour force redistribution. Capitalism could be streamlined by removing the older 'inefficient' workers. PEP's analysis of the problem By the early 1930s, the question of the 'aged worker' was arousing increasing concern. The worsening of the depression had speeded up long-run trends in the labour market, whereby older workers were tending to find themselves relegated to light, part-time, seasonal or casual jobs. The motives of employers in such cases were partly hardheaded (since old age was inevitably equated with a decline of physical strength), and partly paternalistic: an older employee with a record of long and loyal service to a firm would be looked after by being allocated manageable, light work at lower rates of pay (often subsidised, after the age of 65, by the old age pension). In addition, it was observed that the depressed 'heavy' industries contained a high proportion of older workers, and that they experienced higher rates of unemployment. It seemed beguilingly obvious, therefore, that for a relatively small amount of public expenditure, there could be introduced an improved pension scheme carrying a retirement condition that would encourage a substantial number of these older, 'inefficient' workers to withdraw from 9

10

PEP Civic Division Memorandum, 'An Outline of a Planned Employment Report', 10 Dec. 1934, PEP Archives, WG 3/4. 'The Exit from Industry', Planning, no. 18, 16 Jan. 1934, p. 3.

PEP and retirement pensions in the 1930s

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the labour force permanently. Jobs would then be redistributed to younger men with families to support (the really tragic victims of the depression), and, above all, industry would be made more efficient. Some of the reasoning was identical to that of Mosley and Bevin; but, unlike them, PEP's prime concern was with industrial efficiency rather than with social justice to workers or protection of the wage structure. PEP thus investigated retirement pensions in 1933-5 in the context of a wider examination of the unemployment problem. The investigation was conducted by several different committees, working in conjunction with each other. A 'Social Assistance Group' looked at the implications of a new pension scheme for the existing insurance system; an 'Education Group' resurrected the question of raising the schoolleaving age, and eventually recommended a minimum leaving age of 16, accompanied by day-continuation class provision until 18; pensions were considered in detail by the Tensions and Retirement Group'; and, most important of all, an 'Employment Group' examined the effect the policies would have on unemployment. The Employment Group had as its chairman the ex-civil servant Sir Ronald Davison (who had just taken early retirement from the Ministry of Labour in order to pursue a career as a freelance researcher, lecturer and author: he was to write two notable studies of unemployment insurance), its secretary was A. D. K. Owen, and four leading figures in PEP served on it. The background research papers and published output of these committees reveal, as Labour had found several years earlier, how tantalisingly attractive yet ultimately frustrating was the prospect of labour force redistribution. In 1931, there existed a total of 3,316,453 persons aged 65+ in the United Kingdom. Of these, 837,905 were formally classified as 'gainfully occupied'. (The official labour force participation rate of males aged 65+ was 47.9 per cent in 1931.) However, as social surveyors such as Caradog Jones discovered, the term 'gainfully occupied' was problematic because it in no way encapsulated the diversity of older workers' labour force participation. Hence census data were inaccurate. Essentially, there were two problems. First, 'gainfully occupied' included the unemployed: these numbered 144,281 out of the 837,905. Second, although no precise numerical evidence existed, all observers agreed that a large number of older workers were concentrated in light, casual, part-time or seasonal work. They precariously held on to these jobs primarily out of economic necessity; but it is also likely that, in a culture in which retirement was still a relatively novel experience, older workers were reluctant to relinquish the category of 'gainfully occupied' because such a step would have involved the painful self-admission that old age had finally arrived. It also represented

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the triumph of hope over economic reality, in that they imagined a job to be just around the corner. Hence PEP commented, somewhat ungenerously, that 'the term "gainfully occupied" must be interpreted with caution when applied to elderly persons . . . [many] are loath to admit that they are no longer "gainfully occupied" and continue to record themselves as such on theflimsiestpretext of paid work'.11 If one accepted the accuracy of the term 'gainfully occupied', and deducted the unemployed from it, one was left with a total of 693,624 persons aged 65+ in work in 1931 (548,221 males and 145,403 females). However, a large proportion of these were receiving an old age pension anyway - some two-thirds of all persons aged 65+ received one - and thus an additional supplement to the existing pension, paid on condition of permanent withdrawal from the labour market, would remove a significant number of workers who, it was argued, were only there because of their poverty and, at the same time, were 'clogging up' industry. Most important of all, this could be achieved at relatively low net cost.12 Even more dramatic in effect would be a scheme forcing insured workers to retire at the age 55. This could liberate as many as 800,000 jobs for possible redistribution to younger workers.13 However, on closer investigation there were some formidable practical problems to be overcome if any such scheme were to work at all successfully. First of all, the existing obstacles to retirement would have to be removed. At 10s Od per week the contributory and non-contributory pensions were so low that old people frequently tried to remain in work for as long as possible, the pension being no more than 'a concealed subsidy to low wages', as PEP put it; as has been shown, some employers reduced the wages of workers when they reached the age of 65, so they were no better off. Again, because wives were usually younger than their husbands, they did not become eligible for their pension until some time (up to several years) after their husbands had reached the age of 65; men were thus unwilling to contemplate retirement until this moment had been reached, since it was an utter economic impossibility for a married couple to live on one 10s Od pension. Finally, a number of working-class people of small means were not covered by the 1925 Act, and thus had to wait until the age of 70 to receive a pension.14 11

12

13

14

PEP Employment Group Memorandum, 'A Retirement Policy for Industry', 21 Jan. 1935, PEP Archives WG 3/5. Political and Economic Planning, The Exit from Industry (May 1935), pp. 4 0 - 1 ; 'Old Age and Retirement', Planning^ no. 42, 15 Jan. 1935, pp. 13-14. 'The Exit from Industry', pp. 4-5; PEP Civic Division Memorandum, 'Note for Pensions Broadsheet', 11 Jan. 1934, PEP Archives WG 14/1. 'A Retirement Policy for Industry'.

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The second principal problem was that, whilst universal retirement at 55 would have a dramatic effect on the unemployment figures, it would also deprive industry of many skilled and experienced workers, and their loss might result in more rather than less unemployment. No scheme could distinguish between the 'useful' worker (in a job where experience mattered) and the 'worn-out' worker. Related to this was perhaps the most difficult problem of all, which had dogged the Mosely scheme the question of whether each 'old' job vacated would be filled by one young worker, and whether this tidy redistribution would operate successfully on an industry-by-industry or a regional basis. Most observers agreed that older workers were relegated to relatively unimportant jobs. It was likely, therefore, that a significant proportion of them, if compulsorily retired, would simply not be replaced. The ratio of 'old' jobs vacated to 'young' ones created could be as poor as three or four to one. The problem was put in a nutshell by F. A. A. Menzler, of the London Passenger Transport Board, in a comment on PEP's proposals. 'Whatever may be said about private enterprise', he wrote, 'firms of medium size and upwards do in fact behave tolerantly, so long as means permit, towards their older employees and put up with lower standards of output and achievement than they would expect from younger entrants. Again, there is the tendency to keep on the older employees pottering about on light jobs.' If a new retirement pension scheme were purely voluntary, Menzler argued, then only the least efficient older workers would leave industry; the vacated-to-created ratio would be about three to one. 'On the other hand the hale and hearty are not going to give up £3 or £3 10s Od a week unless the retirement pension is of substantial dimensions. I cannot see the physically fit man of 60 retiring to his backyard in Bermondsey for even £2 a week, and surely £2 a week would be too costly to be contemplated.'15 Quite simply, nobody knew what precise effect a retirement pension scheme would have. All PEP could do was to try and make a case by implication, backed up by statistics on the age profiles of certain industries. In all the insured trades, 11.1 per cent of male employees were aged 55-64. Those with the highest percentage of insured male employees in the age group 55-64 were: pig-iron (blast furnaces), 25.0 per cent; dock, labour, river and canal service, 19.2 per cent; woollen and worsted trades, 16.7 per cent; cotton weaving, 16.5 per cent; carriage construction and repair, 15.3 per cent; clothing, 14.3 per cent; steel melting, etc., 14.1 per cent. On the other hand, in all the insured trades 27.8 per cent of male employees were aged 16-24. The relatively 'young' industries (those 15

F. A. A. Menzler to Max Nicholson, 23 Nov. 1935, PEP Archives WG 14/2. Menzler later served on the Phillips Committee on Old Age (1954).

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Table 11.1 Numbers of elderly workers compared with unemployed, by industries (November 1933) Insured trades Coal-mining Building Distributive trades Engineering, etc. Transport,communications Metal trades Public works contracting Food, drink and tobacco Dock, harbour, river and canal services Cotton All industries (incl. others not shown above)

Male insured Male unemployed workers aged 55-64 workers aged 16-64 119,250 100,300

310,264 180,810

91,970 76,840 57,900 39,270 36,190 30,530 30,380 29,660

170,054 141,277 128,978 64,512 131,165 40,089 49,655 39,714

1,009,380

1,925,771

Source: 'The Exit from Industry', Planning, no. 18, 16 Jan. 1934, p. 12.

with a high percentage of employees in this 16-24 age group) were: distributive trades, 42.1 per cent; sawmilling, furniture and woodwork, 41.1 per cent; commerce, banking, insurance and finance, 38.7 per cent; metal trades, 35.2 per cent; printing, publishing and bookbinding, 34.1 per cent; construction and repair of motor vehicles, cycles and aircraft, 33.3 per cent.16 The 'old' industries were the highly labour-intensive ones that were shedding labour steadily throughout the inter-war years, and would take advantage of a compulsory retirement scheme at the age of 55 to speed this up, without necessarily creating any new 'young' jobs. Conversely, no retirement scheme would encourage the new light industries, the commercial enterprises or the retail stores to take on more young workers than they needed. However, some optimism could be gleaned from a comparison of old and young unemployed workers in certain insured trades: on the face of it, an industry-by-industry redistribution looked plausible, even if the replacement ratio was between four and two to one (see table 11.1). But PEP recognised that such figures were 'scarcely of more than theoretical interest', since enforced retirement on such a massive scale would have enormous social and political consequences. There would be 'a formidable leisure problem', and some kind of educational provision or even retirement training would have to be offered to the 'new old' aged 55+, especially as working-class culture was deeply imbued 16

'The Exit from Industry', p. 12.

PEP and retirement pensions in the 1930s

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17

with the traditional industrial work ethic. It would be politically impossible to compel every insured worker over the age of 54 to cease working. For one things the unemployment insurance scheme excluded agriculture, railways and domestic service (there being over 200,000 male and female agricultural workers 'gainfully occupied'), as well as the self-employed working class. There would be great resentment from those insured workers who did not wish to retire, and those uninsured ones who did; as, indeed, there would be if the scheme were not applied to the middle-class professions. A compulsory retirement age, fixed by the state, after which no one would be allowed to work for a wage or salary 'would involve an unprecedented restraint on individual liberty', and would require such a generous pension (to maintain retirees and their spouses above subsistence level) that it would be prohibitively expensive, necessitating levels of taxation incompatible with PEP's liberalism. Even if compulsion could be enforced in the case of 'insurable employment', it would involve a breach of contract with the 1925 Widows', Orphans' and Old Age Contributory Pensions Act. Compulsion thus had to be ruled out. But the alternative of financial inducement also presented grave political problems: the more generous the scheme, the more effectively would it redistribute employment - but also the more would it be resented by younger workers (for example, if the new pension were higher in value than unemployment benefit). Even a voluntary scheme would have to carry considerable sanctions in order that its retirement condition be enforced successfully. It would have to be an offence (punishable by a fine) for a pensioner or his wife to re-enter insurable employment, and for an employer to engage them. If a pensioner surrendered his or her right to the new pension in order to resume employment, he or she would be disqualified from ever receiving such a pension again (in order to prevent the scheme from becoming a quasi-dole). Great difficulties would arise in trying to prevent a retirement pensioner setting up in business, doing odd jobs here and there, or even working full-time in an uninsured occupation. Again, whilst no means tests would be applied directly, about half the value of the pension would be taken into account in any household means test applied to another member of the same co-resident family. Given the scale of existing working-class hatred towards the household means test, the new pension might cause even more resentment.18

17 18

'A Retirement Policy for Industry*. PEP Employment Group Memorandum by A. D. K. Owen, 'A State Retirement Pensions Scheme', 3 Dec. 1934, PEP Archives WG 14/1.

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The retirement pension schemes In a series of meetings, the PEP Employment Group pondered on these problems, and realised that a compulsory scheme beginning at the age of 55 would be completely impossible. A number of lesser alternatives suggested themselves. Some government help could be given to bodies like the National Savings Association, or the friendly societies, in order to assist working people to accumulate greater lifetime savings for their old age; but, given the paucity of working-class assets, and their unequal distribution, this would only be of very limited effect. There was also discussion of plans to speed up the spread of private pension schemes. But most attention centred on some kind of improved state retirement pension scheme that would be socially acceptable.19 A preliminary outline of two possible schemes was published in Planning on 16 January 1934. The first would offer a pension of 30s Od per week for male insured workers and 20s Od per week for female ones, aged between 55 and 64. If two-thirds of such workers in that age group, employed and unemployed, took it up, it would have a net annual cost of £20,000,000 (after savings in unemployment benefit, unemployment assistance and public assistance). But such a scheme would engender many of the social and political controversies outlined above. A more limited and practicable scheme was the second: to pay such a pension only to those already unemployed and aged 55 to 64. This would probably be taken up by 256,000 men and 18,000 women and the total cost (assuming one adult dependant for each man, but none in the case of women) would, after massive savings in dole payments, be a mere £2,000,000 per annum. However, its effect on the unemployment figures would be paltry.20 The fruits of all these deliberations finally saw the light of day in May 1935 as two publications, The Entrance to Industry and The Exit from Industry. Each had originated as separate chapters in a much longer survey by PEP of demographic trends, the labour force and the economy, completed a few months earlier and synthesising the work of the different committees. The Entrance and The Exit were thus two interconnected parts of a wider strategy to lower unemployment and improve workforce efficiency. The Entrance recommended the raising of the minimum school leaving age to 15 and the provision of day-continuation classes for those aged 15 to 18. After savings on unemployment benefit and assistance, and on junior instruction centres, the net expenditure would be between 19

* A Retirement Policy for Industry'.

20

'The Exit from Industry', pp. 6-8.

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£9,000,000 and £14,000,000, depending on the cost of such school places. If maintenance allowances were paid, the net cost would rise to between £20,500,000 and £25,500,000. Some half a million employment opportunities for those aged over 18 would be created. The Exit outlined PEP's final agreed plan for dealing with the top end of the labour force age structure. Reflecting the growing concern over the population problem, it opened with a warning (based on the alarmist demographic predictions of Dr Grace Leybourne) that the proportion of the British population aged 65 and over would rise from 7.2 per cent in 1931 to 11.2 per cent in 1951 and 17.5 per cent in 1976. 21 The pessimism of this introduction was immediately heightened by a remarkably gloomy second paragraph, in which older workers were virtually blamed for Britain's current industrial ills. It is a passage which stands as striking example of the ageist rhetoric that increasingly permeated 'expert' analyses of the population problem in the late 1930s and 1940s, and is thus worth quoting in full: The elderly are a numerous and increasing group in the population, and they differ conspicuously in certain characteristics from the adults in the younger age-groups. Their health and vigour tend to be lower, in spite of improved standards of national health generally. In adaptability to new processes and their capacity to learn to handle new machinery, they are at a serious disadvantage compared with younger people. High-speed and mass-production business systems impose on them a strain which they feel with excessive severity. Often when they cannot stand the pace, lighter work is found for them, with or without reduction of pay, but in any case their grip upon their employment is increasingly precarious, and once they lose it their prospects of getting a fresh job are remote. In the depressed areas these disabilities are felt with extra force. There, in a comparatively small section of the country, is concentrated more than half of the unemployment at ages 55 and upwards. It is not often recognised how closely the problem of the depressed area is bound up with the problem of the elderly worker. In a sense, wherever the elderly worker exists there is an actual or potential distressed area, due to his greater exposure and reduced resistance to economic blizzards. Younger men may migrate from one place, orfromone industry to another; the older man is almost tied to the spot. Where elderly workers exist in large numbers, and especially where they are dependent upon a single industry, distress is hard to keep at bay. Since 'many of the elderly' were 'marginal workers', they should relinquish the jobs that they precariously held on to and pass them over to young workers with families. Societal attitudes towards old age were changing as life expectancy lengthened; a worker should expect a shorter working life. If enforced leisure had been created through 21

The Exit from Industry, p. 5.

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The debate on retirement pensions

unemployment and new technology replacing labour, then such leisure should be confined to the old. 22 In the final event - after all the painstaking deliberations of the previous two years - PEP's eventual recommended pension scheme was disappointingly paltry. Large-scale retirement at the age of 55 was rejected on grounds of prohibitive cost: PEP's defence of the taxpayer thus over-rode its commitment to lowering unemployment. Even commencing at 60, and only covering insured workers, a pension of £1 per week (with an additional 15s Od per week in the case of married men) would cost £146,000,000 per annum. This only left retirement at 65 which, because of the existing state pension schemes, had come to be regarded as the 'normal' age of labour market disengagement.23 PEP thus recommended a rather cautious scheme. There would be an additional pension, paid at age 65 on existing contributory conditions, of 10s Od and 5s Od per week respectively to men and women when they retired from work; wives aged between 50 and 65, if married for five years, would receive a pension conditional on their own and their husband's retirement once the husband had reached the age of 65; and the existing pension of 10s Od per week for wives over 65 would continue. Thus single men and women would receive £1 and 15s Od per week respectively, and married couples 30s Od. Assuming that only half the employed contributory pensioners aged between 65 and 70 retired, then 316,000 jobs would be vacated. On a modest three-to-one replacement ratio, this would reduce unemployment by 105,000. This was a relatively insignificant number and, as we shall see, it enabled PEP's critics to dismiss the whole idea. But the cost would be attractively modest - between £27,000,000 and £32,000,000 (including payments to wives), depending on the level of take-up. Savings on existing social security payments would take this right down to between £6,400,000 and £9,200,000. And financing the scheme by higher insurance contributions would bring it down even lower.24 Disappointing though this final scheme was, at least PEP had kept alive the idea of retirement pensions in a hostile economic climate, and its ideas elicited some interest. There was growing concern in the late 1930s that the fall in unemployment among men over the age of 45 was slower than for men aged 18-45: clearly, older unemployed men found much greater difficulty in regaining work.25 For example, in his first (1935) report, the Commissioner for the Special Areas, Malcolm Stewart, suggested the provision of facilities to allow youths to enter industry later, plus a new retirement pension for the over-65s as policies 22 25

23 24 Ibid., p. 5. Ibid., pp. 7-8. Ibid., pp. 26, 3 0 - 4 . G. D. H. and M. I. Cole, The Condition of Britain (1937), pp. 227-8.

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26

to alleviate unemployment. On the far left, the communist Wai Hannington suggested a state retirement pension scheme of £1 per week (£2 for a couple) at age 60.27 The problem of older unemployed men in the depressed areas was briefly discussed within government, but no action was forthcoming.28 Most interesting of all was the three-hour debate by the House of Commons on 21 February 1934 of a motion, moved by John Banfield (Labour) and seconded by the veteran Clydesider, David Kirkwood, on the need for a new pension scheme for the over-60s which would be sufficient in amount to 'encourage' retirement. Banfield took the familiar Labour line that existing pensions were both inadequate to live on and being used by employers to justify wage cuts: he cited the instance of a London bakery firm which employed twenty-seven persons, of which eleven were pensioners.29 Strong opposition (in the form of an amendment) was mounted by the Conservatives Reginald Croom-Johnson, Lord Scone and Leslie Hore-Belisha, who eloquently listed the many practical obstacles. People might pay insurance contributions for their working lives and then not want to retire at 60; the scheme would require heavy policing, which would be resented; there was enormous uncertainty over the number of jobs that would be created - 'industry cannot be compared to a cab rank, on which, as the first cab moves off the rank, the bottom one moves up'. Most of all, Banfield's scheme, if applied to all the over-60s, would cost £207,000,000, even after savings on existing pensions. If applied only to insured workers over 60, it would carry a net cost of £114,000,000, after all savings, and might create, at the most, 400,000 vacancies. The cost of each job created would thus be £285 per annum, which was more than twice the amount of wages that the man displaced might have been earning. Hore-Belisha drily concluded that he was 'not surprised that the Opposition, when in office, came to the same conclusion that we are bound to come to, that this is not an economic proposition'.30 Typical of this 'practical' opposition was the speech by Neville Chamberlain, when Chancellor of the Exchequer, on 3 October 1935, at the Conservative Party Annual Conference. A resolution was moved by W. A. Grierson, chairman of the Bolton Conservative Party, on the need for a new, higher contributory pension of £1 per week (single) and 26

27 28 29 30

First Report of the Commissioner for the Special Areas (England and Wales), Cmd. 4957, July 1935, pp. 8 7 - 9 , 9 0 . Wai Hannington, The Problem of the Distressed Areas (1937), pp. 2 6 8 - 7 3 . See material in PRO A S T 7/317. HofCDeb., 5s, vol. CCLXXXVI, 21 Feb. 1934, cols. 4 1 9 - 2 9 . Ibid., cols. 4 3 4 - 5 7 .

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30s Od (couple) at age 65 for those who agreed to retire. He made it clear to the conference that his resolution 'had nothing in common with the fantastic proposals of Mr Lloyd George or the Socialist Party, who wanted pensions at sixty'. But he presented the familiar arguments about inadequate pensions on the one hand, and unemployed young men on the other; with contributions raised by 3d per week all round, a scheme could be operated that, on a 2:1 replacement ratio, could liberate 200,000 jobs at a net additional cost to the state of only £1,000,000 per annum (after savings on unemployment benefit, etc.). Grierson was clearly a reformist, concerned at the indifference shown towards unemployment by the National government, and he based his case on The Exit from Industry.

In reply, Chamberlain disputed Grierson's arithmetic, and concluded that no more than 105,000 jobs would be vacated for possible redistribution. Workers would not be able to afford the higher contributions necessary to keep down the cost of the scheme. Demographic trends would increase the proportion of elderly by 50 per cent by 1956, and thus it was imperative that older workers remain in the labour market if pension costs were not to become prohibitive: 'I see an increasing burden upon younger members of the community in future', he warned. 'Are you going to create a new penal offence - the offence of doing work?' he asked, clearly sceptical that a retirement condition could ever work. Finally, Chamberlain made a most telling criticism, based on his government's laissez-faire approach to economic planning - that in March and April of 1935 the unemployment level in Britain had, of its own accord, fallen by slightly more than the amount to be produced by Grierson's proposal.31 Thus, although the resolution was referred to its Labour Sub-Committee, the Conservative Party's main Executive Committee rejected it.32 Grierson tried to make his case again at the next conference, spicing it up with imperialistic, 'national defence' arguments designed to appeal to a Conservative audience: long-term unemployment was causing mental and physical demoralisation and weakening the potential military manpower of the nation; at the same time, some 700,000 men aged 65 or over remained at work. 'I submit that the two problems are inseparable', said Grierson.33 But the conference again refused to endorse his scheme. 31

32

33

Report of Conservative Party Annual Conference, based o n Morning Post report, P E P Memorandum, 'Bournemouth Conservative Conference: Retirement Pensions', 11 Oct. 1935, P E P Archives W G 14/2. George G o d w i n (National U n i o n of Conservative and Unionist Associations) to W. A. Grierson, 21 Aug. 1936, copy contained in ibid. Report of Grierson's speech at 1936 Conservative Party Annual Conference, contained in ibid.

PEP and retirement pensions in the 1930s

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The failure of PEP's retirement pensions plan revealed clearly the inherent limitations on liberal social engineering: to be effective, the plan would have had to be enormously expensive - more expensive than its advocates could stomach - and could only have been implemented by bestowing draconian new powers on the state. Both were impossible within the constraints of a liberal capitalist democracy. In the final analysis, both Labour's efforts in 1929 and PEP's a few years later revealed the relative powerlessness of human beings to interfere with the rate at which long-run labour market trends were displacing older workers. Lacking a solid constituency of political support, offering British capitalism nothing but problematic interference, and losing credibility with each month that unemployment fell, the PEP plan fizzled out. It did, however, bequeath to the pensions debate a bitter legacy, in the form of crude 'social capital' arguments relating to the inefficiency and incompetence of older workers. Demographic concerns In the 1930s, there developed a second focus of concern over the social and economic implications of retirement - the debate over the future ageing of the population. From the late 1870s, the British birth-rate steadily declined. In 1871 the birth-rate (England and Wales) was 158.7 per 1,000 women aged 15-45; by 1931, it had fallen to 64.3. The lowest point in fertility was reached in 1933 (also the year of highest unemployment); the birth-rate then rose slightly (because of postponed marriages), and rose significantly from 1942 to produce the 'baby boom' phenomenon. The full effects of this fertility decline were somewhat mitigated by falling mortality, which ensured that population growth continued - albeit at a slower rate: in the 1870s, this had averaged 1.3 per cent per annum, but by the 1930s it was down to 0.44 per cent. As has been discussed elsewhere,34 the fall in fertility gave rise to three principal concerns in the 1930s: that, at some (highly speculative) future date, an actual numerical decline in population would set in; that differential fertility was worsening the inherent 'genetic stock' of the population; and that the proportion of elderly people would grow, throwing an increasing burden upon a diminishing proportion of 34

John Macnicol, The Movement for Family Allowances, 1918-45 (1980), ch. 4; Richard Solway, Demography and Degeneration. Eugenics and the Declining Birthrate in Twentieth-

Century Britain (1990). For a brief exploration, see P. M. Thane, 'The Debate on the Declining Birth-Rate in Britain: the 'Menace' of an Ageing Population, 1920s-1950s', Continuity and Change, vol. 5, no. 2, 1990, pp. 283-305.

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The debate on retirement pensions

'producers' of working age. Having been 4.7 per cent of total population between 1851 and 1901, the number of people aged 65+ in Great Britain rose to 6.0 per cent in 1921 and 9.0 per cent in 1939. Until the 1930s, discussion of the economic and social effects of an ageing population was relatively muted. But there was some. For example, during the passage of the 1908 Old Age Pensions Bill through the House of Lords, the Bishop of Ripon warned that the previous twenty-five years had seen 1,200,000 fewer children and 500,000 more people aged 60+: the 'nation's best asset' was 'a manly, vigorous and numerous race', which population trends were placing in danger.35 Again, Churchill sounded warnings of growing pension costs in his budget speech which preceded the 1925 Widows', Orphans' and Old Age Contributory Pensions Act, and demographic concerns had been part of the reason for the scheme's complicated funding. In the early 1920s, there was a brief debate among interested experts over the possibility of o^r-population, which was partly the product of the deep pessimism engendered by mass unemployment. Beveridge and Keynes conducted a famous duel over the question,36 and other standard works reflected this fear; for example, Carr-Saunders' Population (1925) voiced no concerns over an ageing population, and approvingly cited A. L. Bowley's estimate that - on the basis of birth-rates in 1921-3 and death rates in 1910-12 - the proportion of the British population aged 65+ would rise from 6 per cent in 1921 to 9 per cent in 1951, and then stabilise at 10.5 per cent between 1971 and 2011. 3 7 By the early 1930s, however, concern over future population growth was being expressed within a small circle of professional demographers and social scientists outside government. Demography as a discipline was beginning to take off in Britain, and there was undoubtedly an element of self-aggrandisement in such activities. On a number of levels, the 1930s witnessed a burgeoning discussion of the population problem through the activities of the Eugenics Society, the Population Investigation Committee, Political and Economic Planning, and so on. A certain disregard for caution was evident in two early examples: Grace Leybourne's 'An Estimate of the Future Population of Great Britain' (published in the Sociological Review of 1934) and, more controversially, Enid Charles's The Twilight of Parenthood (1934) (later re-published as The Menace of Under-Population (1936)). Charles's most-quoted contribution was her projections of future population growth, based upon 35

36 37

Quoted in Sir Arnold Wilson and G. S. Mackay, Old Age Pensions: An Historical and Critical Study ( 1 9 4 1 ) , p. 4 4 . Economic Journal, vol. 3 3 , D e c . 1 9 2 3 , pp. 4 4 7 - 8 6 ; Economicas 4 , Feb. 1 9 2 4 , pp. 1 - 2 0 . A. M . Carr-Saunders, Population ( 1 9 2 5 ) , p. 50.

PEP and retirement pensions in the 1930s

261

three alternative assumptions: (a) that fertility and mortality would remain at 1933 levels; (b) that the falling trend in both fertility and mortality would continue at a constant rate; and (c) that fertility would remain at its 1931 level, and mortality would fall slightly. Under assumption (a) the England and Wales population would fall to some 20,000,000 by the year 2035. But Charles favoured model (b), under which the England and Wales population would fall from 40,500,000 in 1939 to 4,400,000 in 2035. 38 Its demographic and behavioural basis was patently absurd, and the economist W. B. Reddaway was later to comment that it gave 'rather ludicrous results . . . it can serve only as a sort of nightmare vision to stir us to prevent its realisation'.39 Nevertheless, it became embedded in public consciousness, and Enid Charles achieved instant fame: during the famous 10 February 1937 House of Commons debate on the population problem, the MP Duncan Sandys called her 'one of the greatest living experts on population problems'.40 Much attention was paid to Charles's projection, in estimate (b), that, whereas in 1935 some 12.5 per cent of the population of England and Wales were aged 60+, by the year 2000 this proportion would have reached 46.5 per cent. The language used by participants was often hyperbolic. A case in point was Sir William Beveridge, who warned in a 1935 radio broadcast of 'the ultimate disappearance of our population'.41 Two years later, Beveridge was predicting that 'the people of these islands are heading for disappearance', since the population of England would fall to 'twenty or even ten millions unless action were taken by the government'. 'Some decline is now certain', declared Beveridge.42 Concern increased in 1936, catalysed by three articles in The Times on 'The Dwindling Family', and the publication of three widely reviewed books - D. V. Glass's The Struggle for Population, A. M. Carr-Saunders' World Population, and R. R. Kuczynski's Population Movements. Though generally sober and scholarly in tone, these books triggered off a spate of sensationalist articles in the press in the late 1930s, predicting severe depopulation, with lurid fantasies of deserted villages, idle factories, seaside and spa towns 'clogged up' with geriatrics in bath chairs, a loss 38

39 40 41

42

Enid Charles, 'The Effect of Present Trends in Fertility and Mortality', London and Cambridge Economic Service. Special Memorandum no. 4 (Aug., 1935). Reddaway, 'Preface', in Wilson and Mackay, Old Age Pensions, p. xv. HofCDeb., 5s, vol. CCCXX, 10 February 1937, col. 492. Quoted in W. H. G. Armytage, 'The Social Context of Eugenic Thought', Gallon Institute Newsletter, vol. 22, Sept. 1996, p. 4. Press cuttings from Nottingham Evening Post, 10 Feb. 1937, Oxford Times, 22 Oct. 1937, Yorkshire Telegraph and Star, 18 June 1937, Beveridge Papers XII 15, British Library of Political and Economic Science.

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The debate on retirement pensions

of 'vitality', 'enterprise' and 'initiative' in public life, and other dire consequences. The perceived consequences of an ageing population were several. First, it was believed that there would be economic retardation, caused principally by a lack of labour mobility and a decreasing supply of new workers. Thus J. M. Keynes argued that the period 1860-1911 had seen a 50 per cent increase in population and, in consequence, a 170 per cent real increase in capital. With a stationary population, consumption could only be increased by a more equal distribution of incomes and a forcing down of the rate of interest.43 The hard-pressed 'producers' of working age would be burdened by higher taxation, to pay for increased pension costs, and this would inhibit enterprise. In actual fact, the combined 'neontic' and 'geontic' dependency ratios were improving slightly: in England and Wales in 1901 the ratio of children aged 0-14 plus old people aged 65+ to those aged 15-64 had been 59.6 per cent, but by 1939 it had fallen to 42.5 per cent - thanks to the decrease in children.44 Second, the nature of consumption would alter, to the alleged detriment of the economy: some would do well - 'nurses and undertakers, slipper and armchair manufacturers'45 - but more 'essential' production would wither. Significantly, the precise economic disadvantages of this shift were never convincingly demonstrated.46 A third concern was one that fuelled the nascent ageism that had already been established by PEP's concerns about older 'inefficient' workers: an 'excess' of old people would stifle economic initiative and enterprise, produce political inertia, block the promotion of the young and thus lead to social tensions. Prominent in this critique was the young Richard Titmuss, who warned that there would be 'an increasingly higher proportion of older persons who will hold appointments by virtue of their seniority. It will take far longer for youth to arrive at responsible and leading positions in every sphere of our social and economic life society will lose the mental attitude that is essential for social progress.'47 Even more strikingly ageist was Titmuss's rationalisation of the 'paralysis' of 1930s' National government politics by his use of demographic determinism. It is worth bearing in mind that 43

44

45 46 47

J. M. Keynes, 'Some Economic Consequences of a Declining Population', Eugenics Review, vol. 27, pt. 2, April 1937, pp. 13-17. David Coleman and John Salt, The British Population. Patterns, Trends and Processes (1992), p. 544. For a cautious appraisal of all the contemporary issues, see: W. B. Reddaway, The Economics of a Declining Population (1939). MarkAbrams, The Population of Great Britain (1945), p. 26. See, for example, Richard and Kathleen Titmuss, Parents Revolt (1942), p. 46. Ibid., p. 47.

PEP and retirement pensions in the 1930s

263

the average age of the British population rose by only 7 years between 1921 and 1947,48 but such empirical realities generally went unheeded in an atmosphere of rampant gerontophobia: Old people are more and more tending to dominate our social institutions: for example, of 558 MPs in the House of Commons who reveal their ages, 2 in 5 received their education before the Boer War (38 per cent are 60 years of age and over) and 1 MP in 8 is aged 70 and over! In the party which calls itself progressive, 1 in 5 of 147 Labour MPs are aged 70 and over and half the Labour MPs are aged 60 and over (1 in 3 being over 65). Of the 558 MPs as a whole, 214 are over 60 (including 63 over 70 and 4 over 80). The average age is 55.2, whilst for titled MPs the average is 58.4 . . . Are these the gifts we require to build a New Social Order? If this age structure explains in part our shortcomings during the past ten49years will it not also shape our future: a cautious, timid, benevolent New World? It was the tone, rather than the content, of such warnings that caused public gloom. Clearly, therefore, the 'population panic' of the 1930s reflected social and economic fears outside the world of pure demography: partly it was influenced by the military and imperial insecurities of the late 1930s as Britain and Germany slowly drifted towards war; partly it was symptomatic of the concerns felt by the first generations to use reliable birth-control methods; and partly it was a vehicle for the growing 'middle way' critique of the prevailing political inertia: many of the participants in the debate were liberal or left-wing in politics, and maintained that the 'parents' revolt' was ultimately a critique of the competitive, individualist ethos of unregulated, free market capitalism. Within the inner portals of government, there was considerable scepticism over these alarmist predictions. Population forecasting had long been the business of the Government Actuary's Department (especially with regard to future pension funding), and senior civil servants did not take kindly to the sudden rush of concern, 'much of it a somewhat hysterical conjecture as to the future', as the Government Actuary put it.50 Again, in 1943 the Registrar-General, S. P. Vivian, grumbled to colleagues that these outside 'experts' had exaggerated the problem, 'owing, it would seem, to a desire to attract publicity for their work and gain public repute'.51 Internal working documents were thus cautious. For example, in 1936 the Government Actuary constructed an estimate based upon death-rates in 1930-2 and birth-rates 7 per cent below that of 1934 (but no assumption of continuous decline beyond 1941), and calculated that the total population of Great Britain would 48 49 50 51

Report of the Royal Commission on Population, C m d . 7 6 9 5 , 1 9 4 9 , p. 1 1 1 . Titmuss, Parents Revolt, p. 42. Epps to Woods, 18 Nov. 1936, PRO T 161/900 (S.33000/03). Memorandum by Vivian (n.d., c. June 1943), PRO RG 26/11.

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The debate on retirement pensions

fall from 45,500,000 in 1936 to 34,500,000 by the end of the century; the proportion of 'producers' aged 15-65 would remain constant at about 68 per cent, with the proportion of children falling and that of elderly rising from about 8 per cent to about 17 per cent. 52 Likewise, the Government Actuary's published report on the 1925 pension scheme firmly rejected the notion of a continuous birth-rate decline, but still warned that the net cost of benefits under the scheme would rise from £42,000,000 in 1934-5 to £60,900,000 in 1965-6. 5 3 (The hazards of demographic forecasting were illustrated by the fact that these official projections under-estimated the fall in mortality.) Some concession to the public mood (specifically, the February 1937 House of Commons debate) was made in the form of the 1942 White Paper on the Current Trend of Population in Great Britain (which offered mildly reassuring projections), and in the appointment of the Royal Commission on Population in 1944 (by which time the birth-rate had risen), but both pro-natalism and gerontophobia made little headway within Whitehall. Nevertheless, demographic pessimism did permeate a wide range of 'expert' opinion and left a gloomy legacy, reflected in several key texts in the subsequent debates on old age - the 1942 Beveridge Report, the 1949 Report of the Royal Commission on Population, the 1947 Nuffield Survey on Old People and the 1954 Report of the Phillips Committee on the Economic and Financial Problems of the Provision for Old Age. When combined with the increasing social capital arguments, voiced by bodies like PEP, that older workers were 'inefficient' or 'worn-out' and were a cause of industrial retardation, the 'population panic' of the 1930s contributed to the increasing marginalisation of the needs of old age from policy debates. In retrospect, it can be seen that the roots of modern ageism were planted in the mid-1930s. 52 53

Epps to Playfair, 23 Dec. 1936, PRO T 161/900 (S.33000/03). Widows', Orphans' and Old Age Contributory Pensions Acts 1925-1932. Report by the Government Actuary, 1935, pp. 27,30.

12

Poverty surveys

A major impetus behind the pension campaign in the 1930s was the conviction that substantial poverty existed among the retired, but that it was hidden behind both the inadequacy of official statistics and the silent, stoical endurance of old people themselves. A universal pension, 'adequate' in amount, would reach behind this veil of self-respect and lift all old people out of poverty. Radical pension campaigners also believed that a pension adequate in amount to fund an 'honourable retirement' would recognise the citizenship worth of old people: it would be a reward from the state for a lifetime of service working in the labour market or in the home. In effect, it was a continuation of the late nineteenth-century demand for the 'endowment' of old age as of right. Deployed against this view was the stern, unbending line taken by the Treasury, whose officials argued that only a small minority of pensioners were in poverty - roughly 10 per cent - and for them adequate support existed in the form of payments disbursed by the Public Assistance Committees (in effect, Poor Law relief renamed in 1929). The Treasury's prime concern in the 1930s was to contain public expenditure in accordance with the deflationary economic philosophy of the National government. But there was also an inherent logic to its view that implementing an across-the-board increase in the basic pension for all would be simultaneously wasteful and inefficient: it would provide an excess of income for those pensioners with jobs, savings or help from family, friends and neighbours; yet it would be insufficient for those with no resources other than the pension. The purpose of this chapter is to try and discover how far the evidence from published poverty surveys throws light on each of these positions. The introduction of the 1908 and 1925 pension schemes brought about huge falls in the number and proportion of old people claiming Poor Law relief. For example, in 1894, out of every 1,000 persons living in the County of London, 40 were aged 65+ and, of these, 15 were in receipt of Poor Law relief; by 1931 73 out of every 1,000 were aged 65+ but only 10 of these received public assistance. Nationally, the combined 265

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The debate on retirement pensions

effect of the 1908 and the 1925 pension schemes had been to lower the number of old people claiming Poor Law relief. This was, of course, especially so in the case of outdoor relief: for example, in England and Wales, the number of persons aged 70+ in receipt of outdoor relief fell from 168,096 on 31 March 1906 to 8,563 on 4 January 1913.1 From the late 1920s, however, the numbers rose slowly, until by the end of the 1930s some 275,000 pensioners were claiming public assistance supplements. There is no doubt that the two old age pensions were gratefully received. Social investigators noticed that practically all old people who were eligible for a pension claimed one, and when interviewed they frequently attested to the importance of the pension as a means of support. cShe is one of the pensioners that has paid in for her pension and is very pleased about that', was one pensioner's tribute to the 1925 Act, recorded by the New Survey of London, which added: 'She dislikes having things from anyone that she has not earned and I think that she would not have taken it unless she had paid in for it.' Perhaps so, but other pensioners could not afford to be so choosy: 'She was very grateful for the OAP and, like most of the other pensioners, said that she did not know what she would do without it', was the rather more typical comment.2 However, many social observers believed that official statistics masked a submerged mass of unmet need. In 1929, the functions of the Poor Law were taken over by local authorities, which henceforth assumed responsibility for paying supplementary payments to pensioners judged to be in need. The means-testing was highly rigorous, however, and it deterred many old people who held strongly internalised values of Smilesian thrift and self-reliance. Take-up of public assistance payments was thus thought to be low, in relation to the numbers who would have been eligible on a less intimidating assessment of needs. On two significant occasions in the first half of the twentieth century, income support to old people was liberalised and the results surprised those who had maintained an optimistic view of pensioner poverty. In March 1906, before the 1908 Act, there had been 229,474 persons aged 70+ on Poor Law relief (indoor and outdoor) in England and Wales. However, by March 1913, there were 668,646 old age pensioners in England and Wales, 93 per cent of whom had resources so low that they were eligible for the full 5s Od pension. Thus, at a stroke, the latent poverty of old people had risen threefold because, in effect, the defini1

2

Hubert Llewellyn Smith (ed.), The New Survey of London Life and Labour (9 vols., 1932), vol. Ill, pp. 188-9; H. J. Hoare, Old Age Pensions: Their Actual Working and Ascertained Results in the United Kingdom (1915), p. 174. Llewellyn Smith, New Survey, vol. Ill, pp. 457-9.

Poverty surveys

267

tion of poverty had changed and the method of estimation had improved. Similarly - as will be fully shown in subsequent chapters - the introduction of Assistance Board supplementary pensions in 1940 led to a rise in those officially denned as needy from 275,000 to 1,250,000 - a fivefold increase. These two episodes appeared to be a serious indictment of official complacency. In attempting to investigate pensioners' economic circumstances in the inter-war years, the historian faces very real difficulties, for two principal reasons. First, the pensioner population was highly diverse, in terms of employment status, sources of income and family circumstance. Second, for reasons that will be explained, old age poverty failed to excite the imaginations of the poverty investigators who prowled the streets of inter-war Britain; thus the considerable technical problems involved in such poverty measurement were never addressed. The evidence that exists is incomplete, allusive and hence very tantalising. The circumstances of old people This diversity within the pensioner population makes it difficult to generalise about old age poverty in the inter-war years. Divisions of class, gender and age were pronounced - to which were added the sociological imponderables of luck, family circumstance, personal resilience and quality of social environment. 'The happiness of old people depends very largely on companionship', noted Caradog Jones,3 reminding us that such human factors were important. Nevertheless, it was incontrovertible that the two most important predictors of one's old age situation were class and gender. Then, as now, an aged working-class woman living on her own, and solely dependent upon her 10s Od state pension, was likely to be among the poorest in society. In a statement that was partly a recognition of this, and partly an illustration of why old age poverty was seen as marginal, the New Survey commented: 'Clearly the problem of the relation of old age to poverty is to a predominant extent a woman's problem, just as that of unemployment... is mainly concerned with men.'4 By contrast, the wealthiest in the old age population were middle-class male retirees, who had accumulated assets and property through their working lives (by inheritance and high disposable incomes) and who enjoyed occupational pensions. In between was a myriad of different circumstances. A rough division of the population aged 65+ would be fourfold, as 3

4

David Caradog Jones (ed.), The Social Survey of Merseyside (3 vols., 1934), vol. Ill, p. 257. Llewellyn Smith, New Survey, vol. Ill, p. 204.

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The debate on retirement pensions

follows. At the top was a wealthy minority, who were exempt from National Health Insurance, and hence the 1925 pension scheme, because they earned more than the upper income limit of £250 per annum. These were the top 10 per cent of income earners who received nearly one-half of total national income in the 1930s, and enjoyed generous occupational pensions. Below this group were those state old age pensioners still in work or with private resources of their own (interest from savings, financial support from family, an employer's pension, a trade union pension, and so on). Together with the state pension, their total income from all sources brought them well above the poverty line. It was an enormous benefit to this group that the 1925 contributory pension scheme carried neither means-testing nor a retirement condition (though the abolition of means-testing for contributory pensioners increased the possibility of employers imposing wage cuts on them). Third, there was a group whose sole formal income was the 10s Od state pension but who lived with relatives and hence received free accommodation plus perhaps a little financial assistance. This kept them just above the poverty line. Finally, there were those pensioners solely dependent upon the state pension and having to pay rent: within this group, marital status was important in that pensioner couples living together were slightly better off than single pensioners living on their own. To live alone on just the pension, even paying a low rent (say, 6s Od per week) meant that one was likely to suffer dietary deficiency, unless one claimed public assistance. Gender was an important determinant, in that women outnumbered men in old age, and were more likely to live alone. As the New Survey blithely recorded: 'More old women than men live solitary lives, as is to be expected, since the women would as a rule be better able . . . to manage themselves.' Conversely, the New Survey found that, in institutions, old men outnumbered old women by two to one.5 The most abject poverty was experienced by a household where a male pensioner lived with a younger wife: the two had to live on a mere 10s Od per week, and could only survive if they received public assistance. Given that wives tended to be on average a little younger than their husbands, men would do everything they could to try and continue working until their wives had reached the age of 65 and a double pension could be claimed. The above division is of necessity very crude: the categories merged imperceptibly into each other, and within each category there were kaleidoscopic varieties of circumstance. 'Quantification' is thus intrinsically difficult. No attempt was ever made to quantify such groupings on 5

Ibid., p. 194.

Poverty surveys

269

a nationwide scale, and one has to compose them from evidence that is part statistical and part anecdotal,6 but they serve some useful purpose. As will be shown, the support of relatives was such a key factor in lifting a pensioner above the poverty line that David Caradog Jones divided his Liverpool sample of pensioners into: those living alone; those living with other old people (mainly married couples living with each other); and those living with younger relatives. In short, family circumstance was virtually a proxy for economic status. Not only was the pensioner population highly variegated, but old age poverty was by its very nature complex. The key determinant of a pensioner's economic status was whether he or she remained in the labour market, or was a member of a household where a breadwinner was so privileged. Thus the greatest single factor creating poverty and economic marginalisation in old age was the slow but inexorable disappearance of jobs for older workers over the first half of the twentieth century. The pension scheme had not caught up with economic realities: it was still viewed as a supplement to male wages. As in the late nineteenth century, the inter-war debate on old age poverty was built around the conundrum that the highest rates of poverty in old age were among women, yet the expressed concerns were over the plight of the older male worker. By the 1930s, there was a concentration of older workers in the old, 'heavy', labour-intensive industries that had been the backbone of Britain's industrial revolution and which were now in relative decline. Such workers would have joined these industries in their youth, when they were booming. By the 1930s these industries were in recession and, in response, were initiating widespread technological changes in their production methods: both of these factors displaced the 'dispensable' older worker. The New Survey noted that employers 'no longer feel the same obligation to retain their old employees, so as to keep them from the workhouse, now that they know that the old people can get a pension'.7 Likewise, Rowntree attested that 'there is a tendency for employers to dismiss old workers more readily than they would have done had there been no scheme of state pensions'.8 In a tiny number of instances, the pensioner was able to continue for a few years at the same remuneration level as when aged in 6

7 8

One estimate on these lines was made by the Treasury and Ministry of Labour civil servant Frank Tribe in 1940, but this was too speculative to be of much use and the quantification of pensioners in poverty was over-optimistic. Memo by Tribe, 'Old Age Pensions. Some Reasons for Adoption of a Household Needs Test Instead of an Individual Means Test', 10 Jan. 1940, PRO T 161/995 (S.45029/5). Llewellyn Smith, New Survey, vol. Ill, p. 201. B. Seebohm Rowntree, Poverty and Progress (1941), p. 114.

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The debate on retirement pensions

Table 12.1. Earnings of a random sample of 3,939 adult males according to age, Liverpool

Per cent of total sample Average earnings

22-24

25-34

35-44

45-54

55-64

65+

10 45s 7d

28 56s 8d

26 60s 8d

21 58s 8d

12 58s 8d

3 43s 8d

Source: Caradog Jones, The Social Survey of Merseyside, vol. II, p. 26.

Table 12.2. Earnings of all persons aged 60-64 and of old age pensioners, Liverpool

Males, 60-64 Females, 60-64 Male old age pensioner Female old age pensioner

Lower quartile

Median

Upper quartile

46s 4±d 9s 5d 24s 3±d _

58s Od 24s 3±d 41s 3d 19s Od

67s lOd 37s 6d 61s 6±d _

Source: Caradog Jones, The Social Survey of'Merseyside, vol. Ill, p. 260.

his or her early sixties. Most often, however, if the pensioner continued working there would be a sharp drop in income, caused by working short time, by being moved to lighter, lower-paid jobs or, more controversially, by experiencing a wage cut equal in amount to the 10s Od pension. David Caradog Jones's Merseyside survey illustrated this clearly. He found that, overall, the average earnings of males (pensioners and others) fell by 15s Od after the age of 65, as shown in table 12.1. But income inequality widened markedly after the age of 65 in the case of 'pensioners only', with the upper quartile of earners still earning good weekly wages and the lower quartile's earnings dropping down sharply, as shown in table 12.2. For example, in the Liverpool docks, the elite of earners aged over 65 were still able to find work, though often for fewer days per week. A small number were even 'serious competitors for work with younger men . . . some employers prefer grey hairs provided that the wearers are physically fit. An old man, it is said, is steadier, probably works harder, and is less anxious than the young to leave his work periodically for a drink or to place a bet.' Such work would become more occasional, and would not last for many years after the age of 65: it was part of a long 'winding down' process in hard manual labour from late middle age. This is clearly illustrated by table 12.3, from the Merseyside survey. (Unfortunately, a vitally important element missing from all of Caradog Jones's tables is a sub-division according to age

Poverty surveys

271

Table 12.3. Percentage ofpersons employed in each age group, Liverpool Age group

Men

Women

22-24 25-34 35-44 45-54 55-59

76.6 81.1 84.4 83.9 77.6

55.3 27.7 15.5 13.8

60-64

72.8 27.7 37.2

65+

(a) Pensioners (b) Others

\ 13.8

J

2.8 7.7

Source: Caradog Jones, The Social Survey of Merseyside, vol. Ill, p. 258.

within his 65+ samples: this would have shown the progressive fall-off in labour-force participation after the age of 65.) Male manual workers tended to move to casual or lighter work in their late fifties, such work becoming decreasingly arduous in nature and less remunerative as they aged until it tapered off into sole dependence upon the pension. In short, this top end of the labour market's age structure was so fluid that it calls into question the value of census data on retirement. Most older workers shifted from day to day between formal categories of 'employed', 'unemployed', 'part-time', 'retired', and so on, in a way that almost defies generalisation. The difficulty of applying hard and fast definitions in such an anarchistic labour market at the upper age ranges is illustrated by Caradog Jones's observation that 'It may be taken that most of those over 65 who describe themselves as "earners" are ready to work on an occasional day or two from time to time, though they might more accurately be described as "retired".' Thus in the Liverpool docks, average weekly earnings after the age of 65 were 31s 9d - 'equivalent to nearly three days' work a week'. In the 55-59 age group, only 25.8 per cent of workers were casually employed; by 65+, however, 41.1 per cent were casually employed (25.0 per cent of pensioners and 64.9 per cent of others - this latter class would be waiting to become eligible for the non-contributory pension).9 The other large group of older male workers observed by Caradog Jones comprised those in light, low-paid work such as being a caretaker, attendant or watchman. A third, smaller group were those engaged in precarious self-employed activities, such as street-sellers: for these self9

Caradog Jones, Social Survey, vol. Ill, ch. 9.

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employed, the old age pension was a vitally important basic income. The largest group of elderly women still working after the age of 65 were cleaners and charwomen, who could to an extent vary the amount of work they did as they grew less physically vigorous.10 There was very little precise quantification of this by the surveys, because it was 'women's work'; hence it was probably under-recorded. Men and women do not live by bread alone, however, and the poverty surveys do not tell us how pensioners were treated as older workers. We can surmise that in some cases - probably in smaller family firms - older workers with long service would have their tasks gently downgraded in physical demand and remuneration, and would be kept on as long as the firm could afford it. This could provide the pensioner with a valuable small income on top of the pension, making all the difference to his or her distance from the poverty line. In other cases, there would be discrimination against the older worker - ranging from petty humiliations to abrupt sackings. As we have seen, the most common complaint voiced by pension campaigners and trade unionists in the 1930s was that a ruthless employer would cut an older worker's wages by exactly the amount of the pension. The social surveys could have investigated this controversial issue, but they do not appear to have pushed their analyses that far. The evidence is tantalising for the questions not asked, as in this account of one woman pensioner: She has only recently given up a post that she has had for thirteen years; they cut her wages and so she left, but the post is open to her if she wants to go back. She still does odd jobs, such as taking in washing or minding other people's children, and earns a shilling or two this way.1 1 As we have seen, Caradog Jones found that the median earnings of male pensioners aged 65+ were 16s 9d less than those aged 60-64 (i.e. 29 per cent less), and this seemed to point to wage cuts. But his explanation was short-time working or lighter work. The TUC believed that the practice of such wage cutting was quite widespread: 'It is done to a very great extent, much greater even than is brought to our knowledge', said a member of its General Council to the Beveridge Committee in 1942.12 But the inter-war social surveys throw no light on the question. In several crucial areas such as this, these surveys fail posterity. It is now time to ask why.

10 11 12

Ibid., vol. II, p. 131, and vol. Ill, p. 259. Llewellyn Smith, New Survey, vol. Ill, pp. 457-8. SIC(42) 9th Meeting, pt. I, 6 May 1942, PRO CAB 87/77.

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The surveys The inter-war poverty surveys took a great pride in their empirical sophistication and accuracy of measurement. Following Rowntree, they made a fetish out of decimal points and calorific values, and their 'scientific' findings undoubtedly became a source of real concern to the National government in the 1930s, since they forcefully revealed the inadequacy of benefits and wages in the case of large families. For the historian of old age, however, these surveys make for frustrating reading. In all of them, old age appeared as an insignificant cause of poverty, and thus merited little more than a cursory mention. They tended to approach the problem from an unhelpful angle, measuring old age as a cause of overall poverty, rather than quantifying the proportion of old people who were in poverty. Before any value can be placed on their evidence, we must ask a few questions about their methodology, presentation and social perception. In his 1899 survey of York, Seebohm Rowntree's central concern was with the health and physical efficiency of the working-aged. His obsession with declining national fitness, and hence industrial productivity, is well known and needs no re-emphasis here. The marginality of old age to his perspective of the problem of poverty is revealed in his failure to separate it out from several other 'causes' of poverty, under the heading 'incapacity of chief wage-earner through accident, illness or old age'. This broad category accounted for 5.11 per cent of those in primary poverty, and an even smaller proportion (3.62 per cent) of those in primary and secondary poverty combined.13 In short, old age poverty was judged to be an insignificant problem. To an extent, Rowntree was following the nineteenth-century Poor Law practice of lumping together the aged, chronic sick and temporarily disabled in official statistics. But his emphasis also reflected what was to be the key concern of social investigators in the following four decades poverty caused by the unemployment of a male breadwinner, and affecting the rest of the household as dependants of that breadwinner. To this was added a strong 'social capital' focus - sometimes consciously expressed, sometimes unconsciously - on the health and nutrition of children, at a time when fertility rates were low. The more memorable titles of the inter-war surveys were emblematic of this concern: Disinherited Youth, Men Without Work, The Human Needs of Labour. The

focus was highly masculinist, and male breadwinner poverty was explicitly linked to industrial and economic conditions in the localities 13

B. S. Rowntree, Poverty, a Study of Town Life (1901, 1922 edn), pp. 153, 438.

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surveyed. Most of the surveys went to considerable trouble to establish clear linkages between family poverty and recession in crucial sectors of the local economy. Hence Rowntree's second survey of York stressed that over 70 per cent of poverty was 'due to causes directly connected with industry'.14 Given that old people were increasingly being viewed as marginal to these concerns, their poverty attracted little attention. 'The most important group is the children', declared Hubert Llewellyn Smith. Likewise, Herbert Tout asserted that poverty in Bristol was 'characteristic of a family, not of an individual, who is said to be in poverty only because he happens to be a member of a family.' Noting that poverty affected individuals under the age of 15 more than others, Tout warned that 'one of the great evils of poverty is thus proved to be its effect upon the rising generation'.15 Following Rowntree's example, the failure to separate out old age as a substantive category was a striking feature of most of the surveys. Thus Bowley's first 'five towns survey' examined the economic circumstances of families, with no breakdown by age, and those aged 65+ did not appear in a table of 'typical households'. Of all households below the poverty line in Bowley's survey, the category 'chief wage earner ill or old' was a 'principal immediate cause' of varying incidence: 14 per cent in Northampton, 1 per cent in Warrington, 6 per cent in Stanley, 11 per cent in Reading and 17 per cent in Bolton.16 Despite Bowley's wellknown methodological pedantry, he did not explain this marked variance. In his follow-up survey, Bowley again used the category 'natural head of the household ill or old', and failed to measure the proportion of old people in poverty. Old age as a cause of poverty had risen in incidence for example, it now accounted for 22 per cent of poverty in Northampton and 23 per cent in Reading - but overall poverty rates had declined. Likewise, Tout's categories were distinctly unhelpful: he found 'old age' to be a cause in 15.2 per cent of families in poverty, but also used the separate category 'unemployment due to advancing age' (5.6 per cent of families in poverty).17 In fact, few of the surveys calculated the proportion of old people who were in poverty. Llewellyn Smith was one who did, but he only examined a sample (in the Eastern Survey) aged 70+, and found 14 15

16 17

Rowntree, Poverty and Progress, p. 40. Llewellyn Smith, New Survey, vol. Ill, p. 83; Herbert Tout, The Standard of Living in Bristol (1938), p. 36. A. L. Bowley and A. R. Burnett-Hurst, Livelihood and Poverty (1915), pp. 40, 240. A. L. Bowley and Margaret Hogg, Has Poverty Diminished? (1925), pp. 78, 128; Tout, The Standard, p. 44.

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Table 12.4 Age and poverty, showing the proportion ofpersons in each age group below standard 0-4 5-9

10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70+

All ages

19.4% 22.8% 20.6% 9.6% 4.1% 4.9% 8.0% 12.8% 10.7% 9.2% 7.2% 8.5% 9.3% 9.2% 12.6% 11.8%

Source: Tout, The Standard of Living in Bristol, p. 37.

roughly 25 per cent of them to be living below the poverty line.18 Another was Herbert Tout, whose life-cycle table implied that old age poverty was much less severe than child poverty in Bristol (see table 12.4). Likewise, Caradog Jones found 14.3 per cent of his sample of Merseyside elderly aged 65+ under the poverty line; by contrast, the poverty rates for his samples of children were 23.2 per cent (those aged 0-4) and 22.5 per cent (those aged 5-13). 19 For most of the 1920s and 1930s, therefore, these social surveys, purporting to use a 'scientific' poverty line based on Rowntree's methodology, found fewer than 15 per cent of those aged 65+ to be in poverty. Yet Rowntree's second York survey of 1936 found fully 47.5 per cent of the working-class 65+ age group in poverty, equivalent to roughly one-third of the total 65+ population of York.20 Rowntree's 1936 poverty line was somewhat more generous; but, still, discrepancy of such magnitude is puzzling. Another feature of the surveys was that, for all their radical potential to challenge wage and benefit levels and toss the issue of child poverty into the political arena, on the question of old age poverty they adopted a disturbingly self-congratulatory tone and were concerned to demon18 19 20

Llewellyn Smith, New Survey, vol. Ill, p. 196. Caradog Jones, Social Survey, vol. I, p. 174. Rowntree, Poverty and Progress, pp. 32, 156.

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strate that great progress had been made. They took it as axiomatic that the introduction of old age pensions had effected the virtual elimination of poverty in the 65+ age group. In the circumstances, this was understandable and it seemed to be verified by their evidence; but it left gaping holes in their analysis and discouraged them from testing that evidence. Subconsciously, they allowed their methodology to be influenced by this assumption. Once again, Rowntree rather set the agenda in his first York survey. In a concluding section he argued that a universal state pension at age 65 would lift all of that age group out of poverty, though it would only lower the overall poverty rate by one percentage point. 21 Subsequent social investigators seemed to take their cue from him. 'The improvement since 1913 is very striking', commented Bowley of the halving of the overall poverty rate in Has Poverty Diminished? (1925) - the title of which was significant. Had there been no unemployment, poverty would have been cut by two-thirds: unemployment was thus the central concern. 22 Again, Caradog Jones briefly mentioned the investigations of Booth and Rowntree, saying that a feature of poverty 'in the past' had been its association with old age: since those surveys, old age pensions had 'been introduced, and one of the principal questions which we shall endeavour to answer is how far that measure has lightened the gloomy prospect of old age for the mass of working-class people.' He thus divided his 65+ age group into 'pensioners' and 'others' 'with a view to discovering the difference made by the receipt of old age pensions' - and showed that the former had a lower poverty rate than the latter.23 Ironically, though, when Rowntree re-examined York in 1936 he found that, despite state pensions, the number of people in primary poverty because of illness and old age had increased since 1899. 24 Yet another difficulty lies in the construction of the poverty lines used by the surveys. Ostensibly, they were based upon the standard procedure of commencing with a minimum nutritional requirement (using authoritative levels such as those drawn up by the British Medical Association), translating this into actual meals which would be costed, and then adding essential items such as clothing, fuel and possibly rent. But from the beginning, most of the surveys frankly acknowledged the sociological truism that all 'absolute' poverty lines have to take into account cultural factors such as prevailing patterns of spending. 'Poverty can be de21 22 23 24

R o w n t r e e , Poverty, a Study, p p . 4 3 6 - 4 . Bowley and H o g g , Has Poverty Diminished?, p. 16. C a r a d o g J o n e s , New Survey, vol. I l l , p . 2 5 5 . R o w n t r e e , Poverty and Progress, p p . 1 1 3 - 1 5 .

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scribed, it cannot be defined', wrote Herbert Tout: 'Ideas as to what constitutes poverty vary from generation to generation.' Again, for Caradog Jones the poverty line was (with his emphasis): 'a certain sum of money, [which] if properly spent, would purchase a bare sufficiency of such necessaries as food, clothing, fuel, light and cleaning materials, according to present-day standards of consumption, for a family of a defined class and constitution.'25 Bowley was even more disarming. Of his poverty line, he said: 'Though this calculation appears to have a scientific basis, and so far as knowledge of nutriment goes is accurate, it is in fact conventional rather than absolute . . . the poverty line thus determined is arbitrary, but intelligible.' He then went on to imply that, despite all its scientistic profundity, the concept of the poverty line could be jettisoned at will if political and economic constraints required it, and could be replaced by 'commonsense', subjective judgements about health and efficiency: 'The agricultural labourer has been able in this and all countries to keep himself in fair physical condition and to bring up a moderately healthy family on less than the cost or the apparent nutritive content of the standard.'26 Statements like these have always led critics of inter-war 'Rowntreeism' to maintain that ultimately such minimum subsistence poverty lines merely rationalise the commonsense view that poverty is, at any point in time, just below low wages - essentially, the criterion of less eligibility.27 'Counting the poor' by this method rarely involves an examination of wider questions of wealth and income inequality, and narrows the focus down to 'circumstantial' causes. Hence apart from a few vaguely troubled passages on the need for a new social order, Rowntree studiously avoided discussing structured inequalities. In his first survey of York he declared that 'It is no part of the object of this chapter to discuss the ultimate causes of poverty. To attempt this would be to raise the whole social question.'28 'Less eligibility' poverty lines cause a minimum of political embarrassment in that they do not challenge wage levels (except perhaps in the case of large families, and this automatically marginalises the problem of poverty). Hence Rowntree's second (1936) survey of York adopted a more 'generous' poverty line than his first (1899). Ostensibly, this was done to introduce a relative element and take into account higher social expectations. (Curiously, his second study contained very little discussion of how the poverty line was actually calculated, compared with the obsessive detail 25 26 27 28

T o u t , The Standard, p . 14; C a r a d o g J o n e s , New Survey, vol. I, p p . 1 4 8 - 9 . Bowley and H o g g , Has Poverty Diminished?, p. 13. See, for e x a m p l e , Victor G e o r g e , Social Security and Society ( 1 9 7 3 ) , p . 4 8 . R o w n t r e e , Poverty, a Study, p . 152.

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in the first.)29 Rowntree's second poverty line was thus 48 per cent higher, in real terms, than his first - but it bore almost exactly the same relationship to prevailing wages: for two adults and three children, excluding rent, it was 61 per cent of average earnings in 1899 and 67 per cent in 1936.30 The most revealing thing about Rowntree, therefore, was not the pages and pages he devoted to discussing calorific values, but the statement he made in 1942 as a member of Beveridge's Subsistence Sub-Committee that 'in arriving at the amount of benefit to be paid to unemployed persons it would in our opinion be unjustifiable to allow for a dietary more costly than can be afforded by a large proportion of working class families when the chief wage-earner is in work.'31 Rowntree was genuinely surprised that the results of his first survey of York were identical to those of Charles Booth: but such temporal coincidences are common in 'expert' poverty surveys.32 The influence of background political events on these 'absolute' poverty lines is also evident in Rowntree's sudden 'discovery' of substantial old age poverty in Poverty and Progress (1941). As we have seen, when the inter-war surveys bothered to measure the proportion of persons aged 65+ who were in poverty, they came up with a figure of around 12 per cent. This was almost exactly the proportion of pensioners who claimed public assistance in the 1930s. However, Rowntree (admittedly, using a higher poverty line) produced very different results from his 1936 study. By the time he wrote up his findings, in late 1940, Britain was threatened by invasion from Germany, and the political spectrum had rapidly swung leftwards. Things were very different from what they had been in 1936. Rowntree composed a rather nervous introduction, crystallising the political fears of his class against a background of Dunkirk and the blitz. He hoped that his findings would produce social reforms, but only moderate ones, retaining 'what is good' and replacing 'what is bad'. 'In the realm of social welfare, a desirable end is often better attained by evolution than by revolution', he pleaded. By 1940, there had built up strong political pressure for an increase in pensions, 'legislation for which is being considered as I write these 29 30

31

32

Rowntree, Poverty and Progress, pp. 2 8 - 3 2 . Guy Fiegehan and Stewart Lansley, Poverty and Progress in Britain ( 1 9 7 8 ) , p. 131. T h e authors calculated that, at constant 1971 prices, Rowntree's poverty line for such a family rose from £6 9 3 p to £ 1 0 26p. Quoted in John Macnicol, The Movement for Family Allowances, 1918-45 (1980), p. 185. Rowntree wrote: 'The agreement in result is so striking that it is perhaps best to say that I did not set out u p o n my inquiry with the object of proving any pre-conceived theory, but to ascertain actual facts, and that I was myself m u c h surprised at the results'. Poverty, a Study, p. 3 5 5 .

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279 33

lines', noted Rowntree apprehensively. In addition, in the summer of 1940, the new and more liberal system of supplementary allowances for pensioners had been introduced, and now one-third of them claimed assistance. Curiously, this was exactly the proportion of York elderly that Rowntree now found to be in poverty. At a stroke, measured pensioner poverty had more than doubled. There can be few better examples of empirical research legitimating itself by rationalising the political status quo. Even if one ignores these broader political and economic constraints, there are grounds for arguing that the 1930s' 'Rowntree' poverty lines were not set correctly in the case of old people. All the social surveys put their minimum needs below those of a working-aged adult. As the New Survey maintained, 'the condition of poverty varies inversely with the scale of income and directly with the scale of wants and both the scales of income and of wants tend to diminish with old age'. Older people were more sedentary, and were thus judged as not having the expenses associated with going to work: 'The fact that the aged live fairly inactive lives naturally increases the life of their garments, which have frequently been worn for anything from five years to a decade or even more. Some, having foresight, laid in a stock of clothing during the last year of their employment.'34 However, this was a controversial point. Pension campaigners argued that supposedly 'scientific' minimum poverty lines should have nothing to do with pension levels: the state pension should be a reward for service rendered to the community, and should be fixed at a generally accepted level of 'adequacy'. Families should not have to support their aged relatives to keep them above the poverty line. By the late 1930s, unemployment assistance was 17s Od per week for a single adult male, and in social debates this was setting a minimum acceptable level for maintenance which the 10s Od pension fell far below. For the political left, 'adequacy' meant a pension of about £1 per week. What particularly jarred with pensions campaigners was the assumption that the minimum dietary level for a person aged 65+ should be put lower in nutritional value than that of a working-aged adult. Typical of this use of equivalences were the New Survey's minima, as shown in table 12.5. From this, Llewellyn Smith drew the distinctly perverse conclusion that an old person living alone and solely dependent upon the pension would only have 2s 6d left for rent, as though rent were an adjustable 33 34

Rowntree, Poverty and Progress, pp. x - x i , 458. Llewellyn Smith, New Survey, vol. Ill, pp. 1 9 0 - 1 , 2 0 7 .

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The debate on retirement pensions Table 12.5. Inactive persons over 65 years: weekly household budget, excluding rent

Food Cleaning Lighting Fuel and clothing Total

One Person

Two Persons

4s 4d 0s4d 0s6d 2s 4d 7s 6d

8s 8d 0s8d 0s6d 3s Od 12s lOd

Source: Llewellyn Smith, The New Survey of London Life and Labour, vol. Ill, p. 76.

luxury:35 it was, of course, food that was the first economy to be made, and when social researchers noted that old people ate less than did working-aged adults, they inferred that this was physiological in origin, rather than a desperate social necessity. Thus the above minimum dietary of 4s 4d per week shown in table 12.5 for a single pensioner was based upon 2,000 calories per day, or 60 per cent of the requirements of an active male. A. L. Bowley was also of the view that a pensioner needed 40 per cent less food than a working-aged adult, and his standard was Spartan: for 1924, 5s lOd was the minimum for a person aged 70+, exclusive of rent. Tout, on the other hand, was more generous - 9s 5d for a man alone aged 65+, exclusive of rent. Caradog Jones set his minimum for a person aged 65+ at 6s 5d, but - being rather more sensitive to the social realities of old people - stressed that a pensioner living alone would not be able to afford a normal rent if solely dependent upon the 10s Od pension - though two pensioners living together would just about reach the minimum. And when Rowntree re-calculated his poverty line in 1936, his minimum levels for old people were much higher. Exclusive of rent, they were: male old age pensioner, 15s 3d; female old age pensioner, 12s 6d; pensioner couple, 22s 4d. 36 Quite apart from the wide variations between these minima, many critics challenged the whole raft of assumptions behind such poverty lines - particularly the prevailing 'expert' view that the need for food suddenly diminished on one's sixty-fifth birthday. At no point were pensioners themselves consulted on the question. As we shall see, in evidence to the Beveridge Committee the TUC strenuously denied that old people needed less to eat than a working-aged adult, as did pressure groups like the National Federation of Old Age Pensions Associations: 35 36

Llewellyn Smith, New Survey, vol. I l l , p. 77. Bowley and H o g g , Has Poverty Diminished?, p. 15; Tout, The Standard, p. 2 0 ; Caradog Jones, Social Survey, vol. I l l , pp. 2 6 2 - 3 ; Rowntree, Poverty and Progress, p. 7 0 .

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281

when given the chance (for example, in old people's homes), they ate hearty meals. On one celebrated moment in inter-war history, Professor A. L. Bowley got his come-uppance from Ernest Bevin when asked to defend his poverty line. Bowley had been called as an expert witness by the shipowners during the 1920 Shaw Inquiry into dockers' wages, to testify that dockers could live on their existing wages (rather than the 16s Od per day that they were claiming). Bevin demolished Bowley's neat statistics by bringing into the courtroom the amount of bacon, fish and bread allowed in the 'Bowley breakfast' for a docker on heavy manual labour and his wife. 'I object to the working class being segregated from the rest of the community and placed on a food basis', said Bevin, who won his case. 37 Bevin's point was one that he and other pension campaigners applied to the support of old people. The state pension should not be based upon the intellectual contortions of middle-class poverty 'experts' like Bowley but upon the value of labour, which concept could also be applied to those, now retired, who had contributed to society during their working lives. Another interesting comment on the difficulty of reconciling these 'scientific' poverty lines with impressionistic, ethnographic evidence is to be found in the writings of George Orwell: Two or three of the lodgers were old age pensioners. Till meeting them I had never realised that there are people in England who live on nothing but the old age pension of ten shillings a week. None of these old men had any other resources whatever. He said: Well, there's ninepence a night for yer kip - that's five an' threepence a week. Then there's threepence on Saturday for a shave - that's five an' six. Then say you 'as a 'aircut once a month for sixpence - that's another three'apence a week. So you 'as about four an' fourpence for food an' bacca. He could imagine no other expenses. His food was bread and margarine and tea - towards the end of the week dry bread and tea without milk - and perhaps he got his clothes from charity.38

The minimum weekly food expenditure cited here by Orwell is exactly the same as that prescribed above by the New Survey (4s 4d) - yet the verdict on its 'adequacy' is very different. On several occasions, Orwell was to rail against the air of social unreality surrounding these 'expert' poverty lines. In a famous passage in The Road to Wigan Pier, he briefly described the fate of two old age pensioners who shared his unspeakably degrading lodgings (presided over by the appalling Brookers). Board 37

38

Peter Weiler, Ernest Bevin ( 1 9 9 3 ) , pp. 2 6 - 9 ; Alan Bullock, The Life and Times of Ernest Bevin, vol. I: Trade Union Leader, 1880-1940 ( 1 9 6 6 ) , pp. 1 2 7 - 8 . George Orwell, Down and Out in Paris and London ( 1 9 3 3 , 1971 edn), pp. 1 1 9 - 2 0 .

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and lodging normally cost £1 a week, but the two pensioners 'handed their weekly ten shillings over to the Brookers and in return got the kind of accommodation you would expect for ten shillings; that is, a bed in the attic and meals chiefly of bread-and-butter'. Given the small profit margin that was made from such lodgers, the pensioners were seen by the Brookers as 'a kind of dreadful parasite who had fastened on them and were living on their charity5; they could not wait for them to die, and had even taken out life insurance on one. In a later chapter in the book, Orwell ridiculed the 'experts' who constructed 'scientific' minimum diets that bore no relation to how people actually lived and, more importantly, what they deserved from an economic and political system.39 The problem here, of course, is that Orwell's reportage was always spiced up for political effect. But his point on normative poverty lines is telling; and even if the pensioners had enjoyed a poverty-line diet, their poverty was also manifested in the way that they were treated. If one contended that non-working pensioners 'needed' or even 'deserved' the same dietary as those of working age, then a far greater proportion of them would have been in poverty than the social surveys revealed. It was generally accepted that a pensioner couple on a combined pension of 20s Od per week were just above the poverty line: this reassuring conclusion would not have been possible if the same dietary for a working-aged adult were used. For example, the Southampton survey cited several prevailing social minima for a working-aged married couple for 1928-32, including a notional 8s Od per week rent: the 'poverty datum line' used by the survey was 26s 6d; unemployment benefit in 1931 would have paid 23s 3d; on public assistance such a couple would have received 23s 3d.40 If allowed the same diet as the working-aged, a pensioner couple with no other resources and paying this normal level of rent would be well below the poverty line. Apart from the ability to earn in the labour market, the crucial factor for pensioners was whether they received financial help from their families. If they were co-resident with their families, this was likely. 'Whether recipients of unemployment benefit are above or below the [poverty] line depends on the rent paid and on the constitution of the family', noted Bowley. Caradog Jones showed that 56.1 per cent of old age pensioners in his Liverpool sample lived with their families - a slightly higher proportion than those persons aged 60-64 (54.5 per cent). Only 15.9 per cent lived alone.41 This solitary state would be very 39 40 41

George Orwell, The Road to Wigan Pier (1937, 1963 edn), pp. 8, 12, ch. 6. Percy Ford, Work and Wealth in a Modern Port (1934), p. 147. Bowley and Hogg, Has Poverty Diminished?, p. 15; Caradog Jones, Social Survey,

vol. Ill, p. 257.

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283

Table 12.6. Source of income ofpersons aged 60-64 and of old age pensioners, Liverpool

Themselves earning Partly supported by earnings of others Partly supported by Public Assistance (a) to themselves (b) to other family members With other kinds of income No recorded income (except old age pension in the case of pensioners)

Persons aged 60-64

Old Age Pensioners

39.3% 66.3%

13.5% 63.2%

7.2% 2.7% 5.5%

4.5% 3.2% 8.2%

2.5%

13.7%

Source: Caradog Jones, The Social Survey of Merseyside^voX. Ill, p. 2 6 1 .

likely to correlate with sole dependence upon the pension. Only a small minority of pensioners were in this situation, and they would certainly fall below the poverty line. Most had several sources of income, as can be seen from table 12.6. A similar diversity of circumstance was discovered by the Customs and Excise Department, when they surveyed 153,509 non-contributory pensioners in November 1939: 64.9 per cent had incomes of under 10s Od per week before the pension (20.8 per cent having no income other than the pension). These incomes must have been in the form of family support, for only 10 per cent were in employment (including selfemployment).42 The social surveys were interested in that recurring twentieth-century question of whether support by relatives had declined over time (especially as a result of the pension), and thus whether state intervention had weakened family obligations. Once again, the verdict was somewhat vague. Although, said the New Survey, it was possible that the slow rise in old people seeking Poor Law relief was an indication of this, nevertheless it was 'by no means to be inferred that the aged [were] neglected by their younger relatives'. There was 'a very general impression that the sense of family responsibility for the maintenance of aged members had become weakened by old age pensions', but 'direct proof of this assertion [was] impossible'.43 Percy Ford's Southampton survey also investigated this point, and concluded that, if such support had declined, it was primarily because of the increasing economic precariousness of the supporters, caused by unemployment. Given that the existence of support from close relatives was a key 42 43

Survey by E. H . Hart, N o v e m b e r 1939, P R O A C T 1/473. Llewellyn Smith, New Survey, vol. Ill, pp. 1 9 9 - 2 0 0 .

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factor in lifting a retired pensioner above the poverty line, the surveys should have investigated this question thoroughly. But - Caradog Jones apart - they seem to have shied away from probing too deeply into the financial secrets of working-class families. Income from savings was never precisely measured. Even Caradog Jones revealed a disturbing tendency to speculation: having found (see table 12.6) that only 13.7 per cent of pensioners were solely dependent on the pension, he went on: 'Most of them, presumably, will in fact be receiving income from unrevealed sources.'44 The problems of the middle class social investigator were hinted at by Bowley, when he noted that, in Northampton, the project was marked by 'the extreme kindness of the town officials in putting at the disposal of the inquiry all information they were asked for, and the extreme reluctance of the majority of the selected householders to surrender the facts wanted from them'. 45 The purpose of this chapter is to show that, for all their apparent statistical rigour and investigative zeal, the inter-war social surveys' investigations of old age poverty were tantalisingly inadequate. Their approach was deeply imbued with the belief that family and child poverty (caused by male-breadwinner unemployment) was a far greater problem, and that the introduction of old age pensions had eradicated all but the worst of old age poverty. If this chapter seems frustratingly inconclusive, it is because the poverty surveys themselves have this air about them. Many intriguing questions lurk behind their veil of sophistication. We cannot understand the polarisation of opinion between the pension campaigners of the late 1930s and the Treasury unless we appreciate that the empirical underpinnings of the debate on pensioner poverty were fiercely contested. 44 45

Caradog Jones, Social Survey, vol. Ill, p. 2 6 2 (my emphasis). Bowley and H o g g , Has Poverty Diminished?, p. 5 2 .

Part IV

The 'Beveridge revolution'

13

The pensions crisis of the late 1930s

During the Second World War, Britain's income-maintenance policies were substantially reorganised. The central episode in this process of reorganisation was, of course, the publication of the Beveridge Report of 1942. At the time - to a war-weary public desperate for good news - the Beveridge Report seemed to promise radical changes. And, from a short-term perspective, the 'Beveridge revolution' did indeed appear remarkable. Within a mere three years, the stifling, restrictive attitude of the National government to any advances in social policy that might require additional public spending had given way to what appeared an exciting, even reckless expansionism. The 1930s had been dominated by the deflationary, 'safety first' policy of fiscal caution, with public expenditure kept low in order to free up capital for investment in the new areas of economic growth. Whatever the rights and wrongs of this policy, its benefits could only come to fruition with agonising slowness. But suddenly, with the fall of the Chamberlain government in May 1940, a new political consensus swept into power; it promised an alternative to the dismal, pre-war recipe that twentieth-century British capitalism could only move from slump to boom at a cautious, incremental pace, maintaining a large reserve army of unemployed labour. The social policy arm of this political and economic New Jerusalem was the Beveridge Report. In Beveridge's brave new welfare state, social security was to be universal in cover, comprehensive in provision and through the 'subsistence principle' - adequate in amount to deliver the long-standing radical dream of a 'national minimum'. Moreover, the new social security system was to be underpinned by three daring assumptions: a universal system of family allowances; a national health service; and - the biggest act of faith - full employment. Little wonder that, to many who had endured the misery and hopelessness of the 1930s, the Report's appearance 'in one of the darkest hours of the war' was 'like manna from heaven', as the Labour politician James Griffiths put it.* 1

James Griffiths, Pages From Memory (1969), p. 70. 287

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The 'Beveridge revolution'

However, viewed in the long term, the Report was merely a logical rationalisation of existing services, written in beguiling language and with recommendations that do not withstand critical scrutiny. In one of his less immodest moments, Beveridge himself acknowledged that in most respects his Report was 'no more than a completion of what was begun in Britain in 1911', and that it was during the pre-First World War period that 'the battle of social insurance for cash benefits and for medical treatment was fought and won in principle'.2 Thus a cursory glance at the history of social policy since 1911 uncovers a number of obvious evolutionary milestones on the road to 1942. It is likely that Lloyd George regarded the 1911 National Insurance Act as no more than a 'temporary expedient', and hoped to complete its unfinished business.3 As this study has shown, 'all-in' insurance enjoyed considerable scrutiny in the early 1920s, with the high-level Watson and Anderson Committees nearly translating it into policy. Beveridge himself had contributed to this discussion with his little pamphlet, Insurance for All and Everything (1924). In the early 1920s, most observers realised, as Philip Snowden put it, that 'the whole problem of social insurance is in a chaotic state. There is no co-ordination'.4 In the late 1930s there were increasingly clamorous calls in parliament for a reorganisation and expansion of social insurance, possibly by a Royal Commission. For example, as early as 1935 demands for an official enquiry into the possibility of a new 'all-in' insurance scheme came from the Labour MPs Charles Edwards and Rhys Davies in the House of Commons. 5 As will be shown in the following pages, these demands steadily grew in the late 1930s until, by the eve of the Second World War, Neville Chamberlain's National government faced a serious political crisis on the question of social policy - with old age pensions as the central issue. Such was this pressure that no government could have avoided some kind of'Beveridge' exercise. Clearly, from this perspective Beveridge was, at best, merely giving eloquent expression to a reformist consensus that had built up over two decades. Viewed from another angle, he was also engaged in a process of containing more radical and potentially expensive demands. The 'evolutionary versus revolutionary' theme in the analysis of the Beveridge Report is so familiar to social policy historians has to have become something of a cliche. Yet it remains a useful investigative 2 3

4 5

Lord Beveridge, epilogue in Eleanor Rathbone, Family Allowances (1949), p. 269. H. N. Bunbury (ed.), Lloyd George's Ambulance Wagon. Being the Memoirs of William J. Braithwaite 1911-1912 (1957), p. 121. HofCDeb., 5s, vol. CLXXV, 25 June 1924, col. 476. HofCDeb., 5s, vol. CCC, 15 April 1935, cols. 1600-1.

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approach, reminding us of the varieties of interpretation that are possible. The short-term, radical implications of the Report were very much a product of the peculiar circumstances of wartime and of the excessive, somewhat uncritical public adulation bestowed upon it. Removed from this background noise, the Report appears cautious, gradualist and riddled with internal contradictions. Where state pensions are concerned, it will hereafter be argued that the 'Beveridge revolution' was a conservative exercise in several key respects. First, and most important, the Beveridge Report recommended that there should be a new contributory pension scheme to replace both the 1908 and 1925 pensions: thus it represented a victory for the Treasury in its long campaign to shift pensions finance away from non-contributory tax funding and to the safer and much less redistributive mechanism of contributory social insurance. Second, the apotheosis of social insurance marked a significant step backwards for the pension rights of women: whereas under the 1908 Act they had received a pension solely by virtue of need and citizenship, under Beveridge's plan the entitlement basis for the majority of women who married and then left the paid workforce was their husband's contributions. Third, the actual pension levels suggested by Beveridge were so low as to represent no real increase on pre-war pension levels; pensioners were specifically excluded from the subsistence principle said to be a cardinal principle of the whole Report and, as a corollary, were not to share in the rising living standards that had allowed other benefits to float up to a level that could be legitimated by the concept of 'subsistence'. In fact, with its twenty-year build-up to full pension rights the Beveridge Report offered very little to any citizen over the age of 45. Finally, Beveridge's discussion of the whole issue of old age was thoroughly infused with a hostile ageism, representing the culmination of the demographic alarmism of the 1930s and arising from fears over future pension costs. However, it will also be stressed that, ironically, Beveridge's attempt at containment was a failure. A mere two months after the Report was published, political pressure forced the level of pensions up to the level of other benefits. From the vantage point of pensions history, it is quite clear that only a long-term, evolutionary perspective can provide an adequate analysis of the 'Beveridge revolution' of the 1940s. Accordingly, it is proposed to begin this final section not in 1941 (when the Beveridge Committee was appointed), nor even in 1939 (with the outbreak of war), but sometime in the mid-1930s; for it was from that point that several key historical forces began to converge. Essentially, from about 1935 onwards there took place a slow welling-up of demands from several quarters that

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aspects of the state pension needed modification and improvement. Taken separately, these demands could be fended off successfully by a long process of incremental concession, although there was a danger that a concession in one area might raise expectations and lead to further demands; taken together, they constituted a potentially major crisis in the Treasury's management of social policy. The role of the Treasury The importance of the Treasury in all inter-war social policy-making has been emphasised by a number of historians.6 Its role was strengthened in the general reorganisation of the civil service that took place between 1919 and 1924, symbolised by the appointment of Sir Warren Fisher as both Permanent Secretary at the Treasury and head of the Civil Service. The dominant economic philosophy of the time - shared by many in the labour movement - was fiscal retrenchment and the creation of a 'balanced budget'. All new public expenditure proposals were thus put under the most intense scrutiny. Policies for economic revival were judged primarily by the criterion of how effectively they would assist the revival of the export trade, which was seen as the backbone of Britain's economic strength. Economic policy proposals that appeared merely to tinker with the symptoms (thus masking the problem, and hence worsening it) were dismissed outright by Treasury officials. This applied both to the public works proposals of the ILP, Lloyd George and Keynes, and also to the retirement pension proposals of Mosley, Bevin and others throughout the 1930s and early 1940s. A typical Treasury response to the idea of a retirement condition for pensions was that 'it disguises the symptoms without increasing the prosperity of the country'.7 Added to these macro-economic considerations was another factor. Treasury officials saw themselves as the most important line of defence against the 'irresponsible' demands of the kind of populist politicians that could so easily emerge in conditions of mass democracy. Without the overarching constraint of the balanced budget, politicians could 6

7

For example: Rodney Lowe, Adjusting to Democracy. The Role of the Ministry of Labour in

British Politics, 1916-1939 (1986), p. 43; G. C. Peden, 'The Treasury as the Central Department of Government, 1919-1939', Public Administration, vol. 61, no. 4, Winter 1983, pp. 371-85; Roger Middleton, 'The Treasury in the 1930s: Political and Administrative Constraints to Acceptance of the "New" Economies', Oxford Economic Papers, n.s., vol. 34, 1982, pp. 48-77; James E. Cronin, Labour and Society in Britain, 1918-1979 (1984), pp. 45-6. Memo by E. Lester, 'Retirement Pensions', 3 Mar. 1942, PRO T 161/1448 (S.48497/ 03).

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court electoral popularity by promising higher spending financed out of borrowing.8 This was viewed by the Treasury as disastrous in the long run, leading to the sort of 'dutch auction' anarchy they believed had occurred immediately after the First World War.9 Control of public spending was thus seen as crucial: in 1924, the Treasury won the right to scrutinise all departmental memoranda proposing increases in public expenditure before submission to cabinet, and administrative devices were used to keep a tight rein on spending departments.10 Social policy and defence both raised this problem, and it is significant that demands under each of these heads coincided in the late 1930s. The right of unelected Treasury officials to exercise control over the political wishes of democratically elected politicians created controversy then and subsequently, raising vitally important questions about democracy and accountability in a modern capitalist state. The saga of pensions in the late 1930s and early 1940s illustrates this very well. In 1935 the Treasury began carefully to monitor developments on the pensions front, to evaluate the arguments of campaigners, to cost the various demands that were being made, and to dig its defensive trenches. Two key officials kept a close watching brief: Bernard Gilbert and Frank Tribe. Gilbert was an archetypal Treasury mandarin: born in 1891 and educated at Cambridge, he entered the Treasury in 1914 and, after war service, remained there for the rest of his career. Knighted in 1943, he completed his career as a Second Secretary between 1944 and his retirement in 1956. Tribe was of a similar generation. Born two years after Gilbert, he was educated at Oxford, served in the war, and joined the Ministry of Labour in 1919. Tribe gained an expertise in social policy matters, acting as secretary to the English Commissioner for the Special Areas between 1934 and 1938. It was no doubt this knowledge of unemployment and welfare policy that caused him to share the pensions brief. Tribe was seconded to the Treasury between 1938 and 1940 as a Principal Assistant Secretary in charge of social service expenditure, but seems to have co-operated with Gilbert on the monitoring of pension developments while still at the Ministry of Labour. In 1940, he was appointed Deputy Secretary at the Treasury and returned there, gaining a knighthood in 1941.11 Of the two, it was Tribe who carried the greater responsibility for pensions policy. He co-ordinated the Treasury's defensive strategy in 1935-9, and was the key civil servant in the Treasury's pensions investigation of July 1939 to January 1940. He composed innumerable detailed memoranda on pensions 8 9 10

Fully discussed in Cronin, Labour and Society. Middleton, 'The Treasury', pp. 59—61. n Lowe, Adjusting, p. 43. Ibid., pp. 42, 73.

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(sometimes daily), corresponded with campaigning organisations, drafted speeches and parliamentary replies for ministers, and was the gatekeeper who shaped the course of policy by deciding which demands were acceptable and which were unacceptable. Carefully, these two men weighed up the tactics they should use to hold back a tide of popular pressure that was causing them both considerable concern. This was a difficult task for, as will be shown in this chapter, an attack was being mounted upon the National government on the pensions issue from all sides, by a number of different organisations, and over several inter-related issues. An across-the-board increase in the basic pension was relatively easy to counter. What the Treasury was more worried about was the cluster of little demands for small improvements which, if conceded, might set up a 'domino effect' that would ultimately lead to universal, tax-funded pensions at the age of 60. Here the pension scheme was potentially very vulnerable, for although the partial shift to contributory funding by the 1925 Act seemed to have insulated it from populist demands, nevertheless the Act had created unintended consequences: eligibility by contribution record inevitably left gaps and anomalies, with certain groups in the population feeling aggrieved. Although the National government gave an outward appearance of strength and invulnerability, political realists knew well that peacetime coalitions in British politics were inherently unstable and had a limited life-span: the Labour Party was slowly rebuilding its electoral strength, the growth of social reformist, liberal 'middle opinion' was creating an all-party consensus on the need for expansions of state welfare, and as unemployment slowly fell so economic confidence returned. In short, the Treasury's task of restraining demands for raised public spending and its distribution through improved social policies was being made increasingly difficult. As this chapter will show, the most important of these demands was for a radical improvement in the state pension. This is not the self-justifying, retrospective view of the historian: it was the view of contemporaries. Frank Tribe himself noted uneasily in 1939 that 'at the present time there seems to be more agitation for an increase of old age pensions than for any other improvement in the social services'.12 The policy alternatives In the late 1930s, the controversy over pensions revolved round five principal issues: the poverty of the aged; the burden to local authorities 12

R N. Tribe to Sir Alan Barlow, 10 Feb. 1939, PRO T 161/930 (S.42179).

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of public assistance payments to pensioners; retirement pensions as a panacea for unemployment; the cost of any improvement in the pension scheme; and the various anomalies and grievances that had been created by the 1925 Act. First, everyone who had knowledge of old people (including old people themselves) suspected that substantial old age poverty existed. However, articulating this case was difficult because of the lack of empirical evidence on pensioner poverty. As this study has already shown, the social investigations of the 1930s paid scant attention to the specific economic problems of old people, focusing instead upon the more immediate concern of family and child poverty. For their part, government departments refused to investigate the financial circumstances of old people. The low priority accorded to the aged reflected their growing social and economic marginalisation, and the fact that most poor pensioners were female. Quite simply, pensioner poverty remained invisible. Against assertions of the hardship of the aged, the Treasury deployed two very effective arguments. The first was that only a small minority of pensioners were in poverty, since relatively few of them claimed public assistance (formerly Poor Law relief, now disbursed by the Public Assistance Committees). Thus out of a total of 2,355,702 old age pensioners on 30 September 1938, only 272,379 (a mere 10 per cent) were claiming public assistance. This statistic was highly suspect, since it was a artefactual product of the extremely strict conditions under which Public Assistance Committees (PACs) awarded relief to the aged. In addition - as John Colville (Financial Secretary to the Treasury) admitted - most of such applications were made for reasons other than financial (usually, for illness or disability).13 The Treasury argued that this demonstrated how few pensioners needed public assistance for reasons of poverty; its critics protested that this merely showed how difficult it was to claim public assistance. When Assistance Board supplementary pensions were introduced in 1940, the enormous volume of take-up was to demonstrate convincingly how fallacious this late 1930s5 figure had been. But, until that moment, pension campaigners could only deploy unsubstantiated assertions: for instance, in a deputation to the Treasury on 2 February 1938, the Labour MP, J. J. Tinker, argued that the fact that only 10 per cent of pensioners claimed public assistance showed that 'a very large number who were unwilling to do so were living in extreme poverty'.14 To these kinds of claims, the 13 14

HofCDeb.^s., vol. CCCXXVI, 6 July 1937, cols. 312-13. 'Old Age Pensions. Note of Discussion between the Financial Secretary and Members of Parliament', 2 Feb. 1938, PRO T 161/930 (S.42179).

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Treasury could argue that 'it may safely be assumed that well over 85 per cent of old age pensioners manage successfully to make both ends meet on their pension and other personal resources', as Frank Tribe put it.15 Tribe's view was 'that on pure merits and apart from sentiment there is little justification for an increase at the present time in the rates of old age pension . . . There is no reason why any old person should be in real need - let alone in destitution.' His considered opinion was that 'many of them had other resources, such as savings, private pensions, friendly society benefits, income from property, and so on.16 Tribe offered no empirical evidence to justify his confidence, but he knew well that the burden of proof was on his critics. Thus, argued the Treasury, an across-the-board increase in the basic pension - 'though doubtless welcome to the aged' - would be a wasteful method of tackling pensioner poverty.17 The second counter-argument effectively deployed by Treasury officials hinged on the fall in the cost of living that had taken place since December 1919, thus improving the real value of the pension. Had the pension been cut to take account of this deflation, then by January 1938 it would have been only 7s Id. In terms of purchasing power, therefore, pensioners were about one-third better off in 1938 than their equivalents had been in 1919. To the Treasury, this demolished any claim that the pension needed improving. However, such arguments cut little ice with campaigners, who maintained that the 1919 increase had only restored the real value of the pension to its 1908 level, and this original figure had never represented adequacy. Pensioners had a right to share in the general rise in the cost of living, they argued; in addition, the official cost-of-living index did not adequately reflect pensioners' budgets (which, of course, consisted almost entirely of food, rent, heating and other essentials) and thus over-stated the improvement in the position of pensioners.18 Besides, the inexorable disappearance of work opportunities for older men meant that an increasing number of them were having to rely solely on the pension. No longer could it be looked upon as a supplementation to wages: now it had to represent something close to 'subsistence'. (We should bear in mind that the 1930s had witnessed much discussion of the nutritionally defensible poverty line.) Pensions were a classic example of those policies originally introduced to supplement the earnings of a breadwinner, but which now had to provide full 15

16 17 18

Memo by Tribe, 'Old Age Pensions. Deputation to be introduced by Mr Ellis Smith', Feb. 1937, PRO T 161/941 (S.44330). Memo by Tribe, 'Old Age Pensions', 19 July 1939, PRO T 161/930 (S.42179). Memo, 'Old Age Pensions and Public Assistance', 2 March 1937, ibid. Speech by Ellis Smith, HofC Deb., 5s, vol. CCCXXVI, 6 July 1937, cols. 310-11.

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maintenance. Campaigners thus envisaged a figure of 15s Od to £1 per week in the late 1930s as the amount needed to fund an 'honourable retirement'. The supplementation of 10 per cent of pensioners' incomes by PACs did, however, give rise to a second issue in the late 1930s. Inevitably, those local authorities with the heaviest burden of supplementation were those in the unemployment-stricken depressed areas - particularly in Scotland and the north of England - with the greatest concentrations of recession-hit heavy industries that had previously employed large proportions of older men. The result was higher levels of rates on businesses and industries that were struggling to survive. By the late 1930s, such local authorities were urging the government to make these supplementary payments a national charge, underwritten by the Treasury. Given its concern with macro-economic management, and its desire to help private industry shake off the recession, the Treasury was just about willing to admit the validity of this argument. The solution that Tribe and Gilbert began to germinate in the late 1930s albeit with some apprehension - was that of transferring the cost of pensioner supplementation from local to central government, targeting only the very poorest pensioners and operating the scheme under the strict rule of the Unemployment Assistance Board. Such a move would, it was hoped, also 'take relief out of politics' (a euphemism for removal from democratic control) in the case of pensioners, who enjoyed considerable public support. This, in effect, was the policy implemented in 1940. A third much-discussed issue was the vexed question of whether an improved pension carrying a retirement condition might induce significant numbers of older workers to leave the labour force and thus liberate jobs for young unemployed. As discussed in previous chapters, support for this idea had steadily grown since the late 1920s, enjoying considerable support among Liberals and moderate Labourites as a quick way of lowering registered unemployment. The case for retirement pensions rested on twin pillars of support. The first of these was the social justice argument, expressed in the rather masculinist language of'citizenship', 'dignity' and an 'honourable retirement' as a reward for a lifetime of service in the labour market. Thus the Communist MP Willie Gallagher argued that the old had served their country forfiftyyears or more, and should be rewarded: They have laboured in the mines and the factories, they have cared for the homes, they have built up our cities, towns and villages, these men and women who are now 65 years of age and over. It can be said with the greatest measure of truth that all that is great in this country, whether in its commerce or its

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institutions, has been based upon the service given by them and their predecessors.19 In addition, when jobs were scarce, social justice demanded that they be allocated to the young. As Ernest Bevin put it: 'We think it wrong for people to be kept gainfully employed unnecessarily after sixty-five, and see the young fellow with his family at a growing stage stood outside the labour exchange. We think it socially wrong and stupid.'20 As noted in previous chapters, such sentiments concealed a certain measure of trade union self-interest, in that retirement at 65 would help younger workers (thereby boosting trade union membership) and would also shrink the reserve army of labour (thereby improving the bargaining power of those in work). The other powerful argument was that a retirement condition would cut the state pension free from a paradoxical tangle. Many reformers on the left argued that the lack of a retirement condition had created by the mid-1930s a confused and self-defeating situation. This was eloquently summed up in 1939 by Bevin, when he stated that there were now three inter-connected problems: first, the existing 10s Od per week pension was grossly inadequate for retirees with no other resources, and should be doubled to reach a level of adequacy; second, the lack of a retirement condition was encouraging employers to impose arbitrary and unfair wage cuts on workers as soon as they reached their sixty-fifth birthday; third, there was the obverse problem that, if there was no such wage cut, an older worker suddenly became better off by 10s Od per week at the age of 65. 21 Tackling the first problem by an across-the-board rise in the pension, without a retirement condition, would only aggravate the second and third problems. However, the imposition of a retirement condition would force governments to acknowledge that the pension should represent subsistence and would thus make a moral and political case that it should be raised to this level; there would also be a redistribution of jobs to the young unemployed, and the undercutting of older workers' wages would cease. By the late 1930s, observers of all political viewpoints had become convinced that the inter-connected phenomena of industrial recession and technological innovation in production methods was marginalising the older worker in the depressed areas: as one Conservative argued, in rather crude language, something had to be done for those men over the age of 60 who had been 'thrown 19 20

21

HofCDeb., 5s, vol. CCCXXXII, 23 Feb. 1938, cols. 5 0 2 - 3 . Memo, 'Old Age Pensions - Rates of Contribution. Meeting With Representatives of the Trades Union Congress', 15 Nov. 1939, PRO T 161/995 (S.45029/4). 'Deputation to Chancellor of the Exchequer from Trades Union Congress, 15 February 1939. Note Taken by Treasury Reporter1, PRO T 161/941 (S.44330).

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out of employment by new methods adopted in business, by machinery which throws them out, and you cannot teach old dogs new tricks'.22 However, within Whitehall there was considerable scepticism over whether a retirement condition could be made to work. There would be evasion by pensioners, and magistrates would be unwilling to pass a sentence on a pensioner for the 'crime' of working.23 As we have seen, at the time of the Mosley, Bevin and PEP schemes, official thinking had been strongly critical of the argument that substantial numbers of older workers would be induced to retire. Labour's claims in the late 1930s that some 250,000 jobs might be redistributed to young unemployed men were viewed with great scepticism by John Colville (Financial Secretary to the Treasury, and for a time the minister holding the pensions brief): Colville argued that it was enormously wasteful to double the pensions of 2,500,000 pensioners just to create a tiny number of jobs. 24 Again, if only 310,000 men and 65,000 women aged 65+ were in some form of employment in 1939, was it worth applying a retirement condition to all pensioners? An interesting final argument on this point put by ministers and civil servants was that a retirement condition would be inconsistent with the right to a pension by virtue of contributory insurance and would thus be bitterly resented. This was the view repeatedly expressed by no less a personage than the Prime Minister, Neville Chamberlain, and was completely at odds with the position Beveridge was to take in 1942. In the House of Commons in July 1939 Chamberlain declared: It seems to me to be utterly contrary to the principles of insurance that you should say to a man who has paid his contribution for pension perhaps ever since he was 16 that when he arrives at the time when he has the right to draw the pension for which he has paid he is to be deprived of it if he continues to follow his occupation for which he may be perfectly competent and in following which he may be the cause of finding employment for others.25 Fourthly, there was the question of cost. This dominated discussion of all pension proposals and necessarily limited the imaginations of everyone who made reform suggestions. As will be shown, the fiscally cautious economic culture of the 1930s pushed the Labour Party towards an acceptance of the contributory principle as the only practicable means of advance. But expansion within the constraints of social 22

23 24 25

Statement by G. E. Haynes, 'Deputation to the Chancellor of the Exchequer from the National Union of Conservative and Unionist Associations', 10 Feb. 1937, PRO T 161/900 (S.33000/03). Memo by Tribe, 'Old Age Pensions'. HofCDeb., 5s, vol. CCCXXIX, 1 Dec. 1937, col. 2147. HofCDeb., 5s, vol. CCCL, 27 July 1939, col. 1719.

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insurance still posed a considerable threat to the economic status quo. A small rise in the employee's and employer's contributions might have to be matched by a large rise in the state's contribution; and this, in turn, could encourage demands for further Exchequer-funded improvements - so that the insurance principle would virtually collapse. In any case, by the late 1930s the Treasury's traditional defensive argument - that working men and women could not afford to pay higher contributions was beginning to break down: the TUC was arguing that working men and women were willing to pay higher contributions to fund an improved pension, especially when they realised how much the working class were paying into private insurance companies every week for fear of having to rely on an inadequate state pension in old age. Treasury hostility to increased pension spending was based upon several arguments. The first, as has been noted, was that all increases in public expenditure were inimical to the deflationary strategy that formed the basis of British economic policy in the 1930s. By the late 1930s, Britain's defence spending was rising (consequent upon the belated rearmament programme), and this reinforced the Treasury's concern to hold down other public expenditure. However, it had quite the opposite effect on campaigners, who argued that rising defence spending merely demonstrated what governments could spend if they had the political will to do so. To supporters of economic orthodoxy, this was sheer fiscal irresponsibility, and would lead to disastrous consequences. Politicians would outbid each other with reckless promises: as John Colville put it: cIf the additional expenditure on the other existing social services is to be of the same order as that on pensions the cost to the taxpayer will clearly be something quite fantastic. Add the cost of the new services proposed, and the possibility of a balanced budget must be dismissed forever.'26 Behind these macro-economic arguments were growing fears about the inexorable, demography-driven rise in pension expenditure in the future as the proportion of old people increased. By the late 1930s, the Treasury was of the gloomy view that population trends would raise pension expenditure by 60 per cent in forty years time. However, radicals viewed this demographic pessimism as highly political and opportunistic - designed to defend the economic and social elite who paid income tax: it was an argument, said a TUC representative, which, 'however suitable for party politics, is useless for purposes of serious discussion'. The TUC took a more positive view, arguing that improved productivity via a properly planned economy would yield the wealth 26

John Colville, 'Socialist Pensions Proposals Examined', Politics in Review, vol. 4, no. 4, Oct.-Dec. 1937, p. 12.

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needed to fund higher pension claims in the future. But it is clear that Treasury officials viewed pension expenditure as very low on their list of priorities. In private, they were disarmingly frank about the 'social capital' or 'reproduction of labour' criteria that rendered pension expenditure socially worthless. As Frank Tribe put it: If we can afford more money for social services, is it more important to spend it on the old than on other services such as those related to nutrition and school meals, medical benefit for wives and families of insured persons, universal dental and ophthalmic benefits, maternal mortality or support for voluntary can be no doubt which class of hospitals? From a totalitarian point of view there help is going to produce the more virile race.28 Bernard Gilbert also argued that public expenditure on pensions had to have a low priority compared with other areas such as defence, unemployment or investment in agriculture and industry: 'Taxation is still high . . . Only an irrefutable case would justify large expenditure of a non-productive character' on pensions, he argued.29 This dismissive view of the essential wastefulness of pension expenditure was to move from whispered conversations in Whitehall corridors and into the public rhetoric of the 1940s. The fifth and final issue was the question of those anomalies thrown up by the 1925 Act. Treasury officials believed that much of the discontent over pensions in the late 1930s was driven by the grievances of relatively small but highly vocal groups within the pensioner population. Making a few concessions might appease these malcontents sufficiently to defuse much of the protest. Carefully, Tribe and Gilbert examined the options. In 1937, the old age, widows' and orphans' pension schemes cost £92,000,000, of which £29,000,000 came from contributions and £63,000,000 from the Treasury. Of all the demands being made in the late 1930s, the cheapest of all, at £4,000,000 per annum, was the lowering of the qualifying age to 60 for wives of old age pensioners. This would ameliorate the cases, small in number (roughly 250,000) but given much publicity, where an unemployed man with a younger wife had to move at the age of 65 from unemployment benefit at 27s Od per week (for man and wife) to a single pension of 10s Od per week. The hardship of such cases was acute and aroused much comment. Slightly more expensive, at £4,400,000, was the granting of the pension to spinsters at the age of 55. But either of these two demands, if conceded, 27

28 29

'Deputation to Chancellor of the Exchequer from Trades U n i o n Congress, 15 February 1939'. M e m o by F. N . Tribe, 'Old Age Pensions', 19 July 1 9 3 9 , P R O T 161/930 ( S . 4 2 1 7 9 ) . N o t e , 'Deputation to the Minister on Spinsters' Pensions, 28th July 1936', ibid.

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might require that pensions also be granted at any age to pensioners' wives, at a further cost of £6,500,000; or that the pensionable age for all women be lowered. Many considered the spinsters' case weak compared to that of all women: as Ernest Bevin said, 'if it is right for a spinster to have a pension at 55, it is right for any other woman to have it at 55'. 30 Very quickly, the Treasury could find itself on a public expenditure slippery slope. An even more radical step would be to keep the pension at 10s Od, but reduce the age of eligibility for both men and women to 60: this would cost £40,000,000. However, there was mounting pressure for an across-the-board increase to at least 15s Od per week: if confined to those aged 70+, this would cost £25,000,000; and if extended to those aged 65+ and to widows, it would be £46,000,000. Pensions of £1 per week for a single person at the age of 65, and 30s Od for a married couple (irrespective of the wife's age) would cost £57,000,000. But Labour's Pensions Plan of 1937 envisaged £1 for a single person aged 65+, conditional upon retirement, 35s Od for a couple if the wife was aged 55+, with the unemployed able to claim the pension at 60: this would cost £78,000,000. The last notch in this ratchet of potentially rising expenditure was the Treasury's 'nightmare scenario': a universal pension of £1 per week at age 60, with no means tests and funded entirely out of taxation (as demanded by the radical wing of the pensioner movement). This would amount to a massive £240,000,000. Because of the ageing of the British population, all of these costs would rise by some 20 per cent in ten years' time and possibly 60 per cent in forty years' time.31 These were the options open to the Treasury at the end of the 1930s. Conceding one or two of them might damp down the political pressure, but might, on the other hand, only encourage further demands. The pensions issue had become the major social policy question in the late 1930s, presenting a potentially enormous threat to the 'balanced budget' macro-economic strategy of the Treasury and attracting a growing body of support. That support was led by the labour movement (in the form of the Labour Party and the TUC) and contained offshoots (such as the spinsters' movement). But it could not have been as effective as it was had it not been underpinned by a growing grass-roots militancy on the part of pensioners themselves. As will be shown, this political leadership reflected a powerful groundswell of popular opinion; and the most radical and feared attack on the National government came from the avowedly socialist National Federation of Old Age 30 31

Labour Party Annual Conference Report, 1937, p. 170. Memo by F. N. Tribe, 'Old Age Pensions', 19 July 1939.

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Pensions Associations. Belatedly - by 1938 and 1939 - politicians of other parties joined the campaign, as it became increasingly clear that the Labour Party would make better pensions a key issue in the imminent general election. In short, by the end of the 1930s there was a powerful social movement seeking better treatment of the aged and thus, by implication, demanding wealth redistribution through social policy. We cannot fully understand the Beveridge Report of 1942 and subsequent developments unless we appreciate the extent of this pressure. Labour's Pensions Plan The first of these demands was for an across-the-board improvement in the basic pension, conditional upon retirement. By the late 1930s, this had become the official policy of the Labour Party, thereby pushing retirement pensions into the forefront of the political agenda. The key figure was Ernest Bevin, whose role as a pivotal figure in the history of state pensions in Britain has never been properly acknowledged. Bevin had picked up the idea when it had been left abandoned after the Mosley debacle, publicised it and, as the most powerful trade unionist of the day, had added his considerable political and personal weight including much backstairs lobbying - to the campaign for better pensions. In true Bevinite fashion, he worked behind the scenes in the 1930s to keep the pensions issue alive, using his position as co-chairman of the National Council of Labour to incorporate retirement pensions into Labour's formal programme. On two important occasions in 1939, the TUC General Council went to see the Chancellor of the Exchequer to press for higher pensions: on each occasion, it was Bevin who did most of the talking, cleverly out-arguing the best brains of the Treasury. Again, in 1943 it was Bevin (now in the war cabinet) who unceremoniously squashed Beveridge's woefully inadequate pension proposals, arguing that the suggested transitional period should be dropped and that full 'subsistence' pensions should be paid from the new scheme's inception. There was thus a strong pensions lobby within the Labour Party and trade unions. The more radical elements still wanted a pension of £1 per week for all at the age of 60, funded out of taxation and with no means tests. More moderate elements - particularly the party leadership - accepted that the 1925 Act had effected a permanent shift in the basis of pension funding and, with their eyes on what a future Labour government could afford to introduce, were secretly relieved by this. Pragmatists like Bevin preferred non-contributory benefits, but recog-

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nised that the 1925 Act was irreversible. This split in Labour thinking went right back to Philip Snowden's celebrated failure in 1924 to seize the opportunity and extend the 1908 pension scheme to all aged over 60, and it reflected the long-standing dilemma within the Labour Party over the contributory insurance principle. The split was also a product of the factional and often quarrelsome politics of the Labour Party. As has been shown in an earlier chapter, the 1931 general election result and the secession of the MacDonaldites had been a catastrophe for the party's parliamentary presence. It was reduced to a mere fifty-two seats and, as Keith Laybourne has pointed out, in electoral terms the 1931 disaster set the parliamentary Labour Party back a generation - back to the end of the First World War, when it had had only sixty-one MPs. 32 But this collapse of its parliamentary presence was not a reflection of Labour's true strength in the country: its electoral roots remained strong - from winning 37.1 per cent of the total vote in 1929, Labour went down to 30.8 per cent in 1931, but up to 37.8 per cent in 1935 - and the party began to rebuild, organisationally and ideologically. Undoubtedly, had the Labour Party possessed a credible leader in the 1930s, its fortunes would have been better. The gaining of only 154 seats at the 1935 general election was something of a disappointment, since over 200 had been expected, but Labour correctly surmised that the National government could not exist forever and that it might just be possible to win a general election in 1940 - or, at any rate, to behave as though victory were possible. For this, proper organisation and a clear programme of economic and social aims were needed. There had always been an 'underconsumptionist' school of economic thinking among radicals in the Labour Party (not necessarily on the left), represented by the Independent Labour Party's Socialism in Our Time package of the mid-1920s, the Mosley memorandum of 1930 and the Socialist League's Forward to Socialism (1934). By the mid-1930s this tradition was manifesting itself in a broad-appeal case for economic planning, through state corporatism, to tackle the urgent economic problems of unemployment, housing, transport and the banking system, as part of a planned national economy. A second key figure, along with Bevin, was thus Hugh Dalton (who had made such a powerful speech of criticism against the 1925 Act and was to continue to support improved pensions throughout the 1930s). In the mid-1930s, Labour was suffering one of its periodic bouts of leadership weakness: George Lansbury quietly faded away into resigna32

Keith Laybourne, The Rise of Labour: The British Labour Party, 1870-1979 (1988), p. 88.

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tion in 1935, and was replaced by Clement Attlee, then regarded as a stop-gap nonentity. For a time, Dalton found himself in a powerful position within the party. With his booming voice, intimidating physical presence, overbearing personality and the intellectual confidence of a professional economist, Dalton took full advantage of his tenure as chairman of the Labour Party in 1936-7. Under the influence of Dalton and Herbert Morrison, the party's Policy Sub-Committee formulated a programme of radical but practical aims which could be implemented quickly in a single term of office by a Labour government with a workable majority: this was published in March 1937 as Labour's Immediate Programme^ and adopted by the 1937 Party Conference. A central assumption behind this document was that enormous damage had been inflicted on the economic and social fabric of Britain by the National government's brand of laissez-faire capitalism, and that, once elected, Labour would have to implement a remedial programme that would effect the transition to a fully planned socialist economy. More radical proposals (the 'Socialist Commonwealth') would have to wait. Labour's Immediate Programme was also designed by the party's mainstream to head off the challenge of the left, as represented by the 'Unity Manifesto' alliance of the Communist Party, the ILP and Stafford Cripps's Socialist League. 33 The acceptance by the Labour Party leadership of contributory funding for pensions was a disappointment to radicals, but it ensured that improved pensions were presented to the electorate as a practical policy in the late 1930s, forcing a reluctant concessionary response from Chamberlain's National government and eventually leading to the appointment of the Beveridge Committee in 1941. The 1930s' pensions campaign was led by a small group of MPs located on the left of Labour's decimated parliamentary presence - in particular, Ellis Smith, J. J. Tinker, Edward Williams, Rhys Davies, William Leach - and the Communist Willie Gallagher. Within the party organisation, the task of drawing up the new retirement pension scheme was handled by the National Council of Labour (whose co-chairmen were Bevin and Dalton). The initial remit was to investigate the possibility of a scheme to commence at the age of 60, and radicals in the party kept a watchful eye on the fulfilment of this promise - suspecting, correctly, that it would be dropped.34 In 1937, the results were published as Labour's Pensions Plan. It was a 33

34

B e n P i m l o t t , Hugh Dalton ( 1 9 8 5 ) , p p . 2 3 6 - 8 ; P i m l o t t , Labour and the Left in the 1930s

(1977), pp. 7 2 - 7 . For example, speech by Rhys Davies, Labour Party Annual Conference Report, 1935, p. 136.

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clearly written pamphlet, designed to minimise actuarial complexities and to woo the electorate. Posters and leaflets were also published, and the cover of Labour's Pensions Plan portrayed an evocative scene of two grandparents, their widowed daughter and her two children. (This extended family scene also contained a teddy bear, which caused Neville Chamberlain to refer to the proposals contemptuously as 'the teddy bear scheme' - a nickname obediently used in private by senior civil servants.) At the outset, Labour's Pensions Plan stressed that the new scheme was one that could be implemented very quickly by an incoming Labour government: it was cwhat a Labour government with a majority would do without delay to care for the aged, the widowed and the orphaned'.35 The essence of the plan was as follows. There would be introduced a new pension of £1 per week for a single person, and 35s Od per week for a married couple, payable at the age of 65, provided that the recipient had retired from gainful employment; unemployed persons aged 60 to 65 coming under the Unemployment Assistance Board, if certified by the Board as unlikely to regain normal employment for economic reasons, would also receive the new pension; the new pension would be granted to a wife as soon as her husband qualified for a pension, provided that she was aged 55 or over; 'pre-Act' widows who hitherto lost their pension when all their children had left school would continue to receive a pension; allowances to widows' children and to orphans were to be increased; and additional contributions to the widows', orphans' or old age pensions scheme could be made to increase the years of entitlement or the amount of pension. 36 The new pension scheme was to be funded by higher contributions from the working-aged. Younger workers would be asked to shoulder the burden of today's pensioners; in return, they would benefit directly by a job redistribution and indirectly by having to maintain aged parents less. Labour argued that the amount currently paid by the working class into company pension schemes and, in particular, industrial assurance companies (mainly to cover funeral costs) was evidence of ordinary workers' ability to pay higher contributions - thus cleverly meeting head-on the argument that improvements in the pension were impossible because working men and women could not afford higher contributions. The industrial assurance companies were greatly disliked by the labour movement, and came in for scathing criticism over their scandalously high expense ratios (of their total annual income of 35

36

National Council of Labour, Report on Labour's Pensions Plan for Old Age, Widows and Children ( 1 9 3 7 ) , p . 6. Ibid., p . 3 .

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£70,000,000, nearly £30,000,000 was being absorbed in management expenses and dividends) and the number of lapsed policies (out of nearly 10,000,000 such policies taken out in 1929, no less than 4,750,000 had lapsed without any surrender value, and further 1,250,000 were discontinued without the policy-holder receiving any adequate return in value). Such policies extracted from the working class more than £1,000,000 every week in subscriptions: if these monies were redirected towards an adequate state pension scheme, then the large, powerful and unaccountable private finance institutions would be forced out of business.37 In contrast to the claims made by some contemporaries (such as Beveridge in his 1942 Report) and even some recent commentators,38 that the existence of private insurance was a tribute to the 'spontaneous' desire of the working class to purchase protection in the market, the Labour Party was adamant that it merely reflected the woeful insufficiency of the state pension. Labour's view was that the existing state pension level was about half what was required to support the aged at a reasonable standard. Old people were thus faced with a stark choice: either they continued working for as long as possible - longer, in fact, than they should - often suffering wage cuts once over the age of 65; or they had to retire through ill-health, or when their employer deemed them to be past useful work in which case they had to live on the pension alone. This was seen as a problem of the capitalist system: the retired were 'those for whom capitalism has no further use by reason of their old age or of capitalism's inability to provide employment for them'. The idealism of Labour's left wing was evident in the argument that this new pension scheme would be a transitional arrangement until a new economic system could be established which would eliminate old age poverty: the eventual aim was an economically planned 'Socialist Commonwealth', which would be designed to 'increase the production of wealth and to equalise its distribution', and thus to 'reduce unemployment to a minimum and eliminate poverty'.39 However, the influence of economic realists within the party was also evident in the rejection of several more radical and expensive alternatives. The long-standing left-wing demand of universal tax-funded pensions of £1 per week at age 60 was ruled out as too costly - though the extension of the pension to those aged 60 receiving unemployment assistance went part of the way to meeting this demand. Likewise, pensions to all unmarried women at age 55 were rejected as 'prohibitive' in cost. 37 39

38 Ibid., p . 14. For example, David Green, Reinventing Civil Society (1993). Labour's Pensions Plan, p . 15.

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If anything, therefore, the publication of Labour's Pensions Plan marked a victory for right-wingers within the party, in that the contributory principle was finally enshrined in official policy. Despite the embarrassment of Philip Snowden's capitulation in 1924, those on the left of the party had always supported the principle of tax-funded, noncontributory pensions, seeing social insurance as divisive, inegalitarian and anti-redistributive. As Aneurin Bevan commented in 1943, ca strictly socialist approach would condemn the whole idea of contributory insurance'.40 It is clear that this radical influence was still strong in the mid-1930s and that the party leadership felt the need to outmanoeuvre it: for example, in announcing the National Council enquiry, the TUC's Annual Report for 1936 warned of the cost of universal non-contributory pensions at age 60.41 Labour's Pensions Plan thus took some trouble to lay out the arguments against a non-contributory scheme. Pensions would be the most expensive item in Labour's 'social programme', and would affect the possibility of funding other parts of that programme; the future ageing of the population would exacerbate this. Universal pensions of £1 per week at age 60 would cost £237,000,000 in 1935-6 and £305,000,000 in 1956. Even after savings on unemployment payments, and allowing for the fact that a retirement condition would be attached, this cost would be 'impossibly high'. On the other hand, the cost of paying £1 per week at 65 (with 35s Od for a couple), plus the various other concessions, would be about £80,000,000 in 1935-6 and £90,000,000 in 1946.42 Such increased expenditure would be met by higher contributions: there would be an additional sum of 'up to' Is Od per week from men and cup to' 9d per week from women (with equivalent amounts from employers). A weakness of Labour's Pensions Plan - one ruthlessly exploited by Neville Chamberlain in several speeches attacking it - was that its precise level of contributions had not been finely enough calculated. For example, on the question of the state's contribution, the plan merely declared that this 'would be fixed at the time of the introduction of these improvements, and would have regard to the economic and Budgetary conditions prevailing at the time and other commitments falling on the Treasury'.43 However, there were suggestions that additional contributions could be as little as 7d or 8d per week, if the state's contribution was increased by £30,000,000 per annum. This was precisely what the Treasury feared most, since it could encourage demands that the pension scheme be entirely tax funded. 40 41 42

Quoted in John Campbell, Nye Bevan and the Mirage of British Socialism ( 1 9 8 7 ) , p. 126. Trades Union Congress Annual Report, 1936, pp. 1 2 9 - 3 0 . 43 Labour's Pensions Plan, pp. 2 2 - 2 8 . Ibid., p. 3 0 .

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A second potential weakness seized upon by critics was the fact that current contributions from younger workers would fund the higher pensions of present retirees, and those just about to retire. In other words, it introduced more of a 'pay-as-you-go' method of funding. By contrast, the 1925 Act had tackled the problem inherent in all state contributory pension schemes - that political realities demand that full pensions be provided immediately for the old, even though they have not contributed towards them - by injecting Treasury money, with the long-term strategy that this subvention would be gradually reduced. In criticising Labour's scheme, John Colville (Financial Secretary to the Treasury) argued that it was an unfair departure from established principle to expect younger workers to pay throughout their working lives for improved benefits given to current retirees.44 Labour's Pensions Plan was debated at the TUC Annual Conference on 9 September 1937 and occasioned some comment from delegates, not all of it approving. T. Griffen (of the Dyers, Bleachers and Textile Workers) complained that it was not a pension scheme. 'It is an insurance scheme', he protested (in language uncannily identical to Chamberlain's in 1925), pointing out that for years the labour movement had advocated universal, non-contributory pensions at 60. Opinion was divided: those against said it was inadequate; those in favour said it was all that could be afforded by a future Labour government. Winding up, George Gibson (of the TUC General Council) attacked the idea of a non-contributory scheme of £1 per week for all at 60. To suggest, as the left-wing journal Tribune had suggested, that the necessary revenue could come from additional taxation on incomes over £2,000 per annum was unrealistic, maintained Gibson: adding 5 s Od in the pound to the income tax that such earners were already paying would only yield some £106,000,000 per annum, as compared with the £230,000,000 such a pension would cost.45 But, overall, the plan was approved by the TUC Annual Conference. A month later, on 5 October 1937, a longer debate was held at the Labour Party Annual Conference. Introducing the new scheme, George Latham (of the National Executive) presented the familiar argument that improved funding of retirement 'under honourable conditions' was needed for those 'who, because of rationalisation or mechanisation, or the shrinking and changing of markets, cannot look forward to reabsorption into industrial life'. Latham accepted that official approval of 44

45

H oj C Deb., 5s, vol. C C C X X I X , 1 D e c . 1937, cols. 2 1 4 8 - 9 ; Colville, 'Socialist Pensions Proposals Examined', pp. 8 - 9 . Trades Union Congress Annual Report, 1937, p p . 3 3 1 - 4 0 .

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the contributory principle would disappoint many in the movement: but there was 'no prospect - under conditions such as Labour would inherit - of raising the necessary means by feasible or acceptable taxation'. In the course of the debate, one delegate attempted to move a resolution calling for £1 per week for all at 60, but Ernest Bevin weighed in to warn delegates that they must approve only those measures that a future Labour Chancellor could implement.46 The plan was adopted unanimously. Labour had finally swallowed the bitter pill of the contributory principle. By these steps, therefore, improved pensions had become part of the official policy of His Majesty's Opposition and were being presented to the electorate as a crucial political issue. Though Labour's scheme was less than radicals hoped for, and had been trimmed to fit the economic realities of the time, it nevertheless caused considerable concern within governmental circles. The National Spinsters9 Pensions Association To this slowly growing campaign there was added an important contribution in April 1935 with the formation of the National Spinsters' Pensions Association. Unmarried women had always formed the majority of the women's movement: for example, they constituted fully 63 per cent of the membership of the Women's Social and Political Union in 1913. To some feminists - notably, Christabel Pankhurst - remaining single, independent and untouched by men was a political act, and, not surprisingly, they encountered considerable hostility both from men and from those feminists who equated sexual freedom with political liberation. As Sheila Jeffreys has argued, 'spinster-baiting' was an ugly feature of gender relations in the inter-war years: the use of epithets like 'elderly virgin', 'maiden aunt', 'disappointed spinster' or 'prude', plus the outpouring of medical literature on the dangers of celibacy, were tributes to the extent of the hostility and contempt shown towards women who, by rejecting sexual intercourse, had also emphatically rejected men. Many politically active unmarried women turned this hostility round: for them, 'spinster' became an emblem of defiance and triumph, and certainly not a badge of shame.47 On the pensions question, the grievances felt by spinsters - and 46 47

Labour Party Annual Conference Report, 1937, pp. 1 6 4 - 5 , 167-70. Sheila Jeffreys, The Spinster and Her Enemies: Feminism and Sexuality 1880-1930 (1985), esp. pp. 86-95. For this section, I have also drawn upon the stimulating ideas expressed in Dulcie Groves, * Onward, Spinsters, Onward! The National Spinsters' Pensions Association 1935-58' (unpublished paper presented at the Centennial Suffrage Conference, Victoria University, New Zealand, 27-29 August 1993) and

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articulated by them with great determination - arose directly out of the anomalies created by the 1925 Act; but they also symbolised wider issues in the politics of gender and revealed very clearly how the genderblind, class-redistributive aspects of the 1908 pension scheme had been eroded by the 1925 Act. Basing pension entitlement on insurance contributions (and thus labour market status) inevitably discriminated against women, whose labour force participation was episodic and irregular. With only some 10 per cent of married women (of all ages) formally classified as 'gainfully occupied', the contributory principle meant that pension entitlement for most women could only come via a husband's contributions. For the 'husbandless' woman, entitlement was precarious. In addition, as in any 'risk-pooling' insurance scheme, the 1925 Act inevitably threw up anomalies that created discontent. Indeed, inter-war women's organisations had numerous complaints about the ways in which the social insurance system discriminated against women. 48 The group that felt themselves most unfairly treated by the 1925 Act were those women who remained unmarried and then, in middle age, found that either their earnings fell sharply or that they suffered periods of unemployment, during which contributions were difficult or impossible to pay. They would then lose their entitlement to the non-meanstested contributory pension at age 65. The effect of the 'fearful fifties' is illustrated by the statistics of labour force participation: in 1931, 74.5 per cent of unmarried women aged 25-44 were gainfully occupied; but only 43.9 per cent of those aged 45-64, and 10.9 per cent of those aged 65+. For every 1,000 adult men there were 1,088 adult women in 1931, and in the age group 40-49 nearly 18 per cent of women were single. The spinsters used the empirically suspect but morally compelling argument that they had remained unmarried because of the 'lost generation' of males killed in the First World War. This was an argument designed to attract public sympathy: they could maintain that they had not intentionally rejected men - they were, instead, war casualties by proxy. Interestingly, Dulcie Groves suggests that those areas where the spinsters' movement was strongest - the small mill towns of Yorkshire and Lancashire - were those areas that had sent large numbers of army volunteers (in the 'pals' battalions') to fight the early campaigns of the war: in such areas it did indeed feel that a 'lost generation' had been

48

Rebecca Calcraft, 'The Spinster in Inter-War Britain' (Royal Holloway, University of London, undergraduate dissertation, 1991). Harold Smith, 'Gender and the Welfare State: the 1940 Old Age and Widows' Pensions Act', History, vol. 80, no. 260, Oct. 1995, pp. 383-6.

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created.49 Thus, on the one hand, the spinsters presented themselves as joyously independent; but, on the other, they played upon the fact that they were tragically 'husbandless', thereby reinforcing prevailing assumptions that marriage was a woman's true destiny.50 In addition, there were growing demands for pensions for women at 55 from trade unions which represented women workers. They argued that in highly feminised occupations such as weaving, textiles, bleaching and dyeing, women usually started work very early in life - by the mid1930s, such women aged in their fifties would have begun work at age 11 - and, because of the considerable physical demands of the job, were worn-out in middle age and unable to adapt to the demands of new machinery. For example, at the 1938 TUC Annual Conference the case for women's pensions at 55 was powerfully made by trade unionists representing women clerks and secretaries, dyers, bleachers, weavers and textile workers.51 Finally, there were many cases where a spinster in middle age had to give up work in order to care for elderly parents (the 'domestic spinster') - thus being judged ineligible for work, and hence not formally 'unemployed'. (Usually, this role of unpaid carer fell on the youngest daughter in the family; it often inhibited her chances of marrying.) There was provision for such women to pay voluntary contributions to National Health Insurance (thus qualifying them for a contributory pension), but such weekly contributions had to be high (Is Id, as against 7d) in order to compensate for the lack of an employer's contribution. Not surprisingly, few availed themselves of this unattractive option. Largely in deference to high unemployment, there was also a 'free insurance period' of up to ten years (available to both men and women), during which contributions did not have to be paid. But some unmarried women fell foul of this provision, remaining non-contributors for slightly more than ten years and thus losing all their pension rights: their numbers were small but their level of grievance was high. Being awarded a contributory pension at the age of 55 would hardly lift them out of poverty and economic insecurity, but it would at least supplement low or irregular earnings. The anger felt by spinsters arose from their feeling that, under the 1925 Act, they had been given a particularly raw deal compared with widows - even though the hardship of the middle-aged spinster was often more acute than that of the widow: they thus sought 'equity with the widow'. Widows tended to enjoy public sympathy, since the death of a male breadwinner was perceived as a 'blameless' contingency; and 49 51

50 Groves, 'Onward, Spinsters', p. 16. I owe this point to Katherine Holden. Trades Union Congress Annual Report, 1938, pp. 334, 386.

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widows had once been married. Another reason for their special treatment was to encourage them to vacate jobs in favour of men. As we have seen, the 1925 Act contained several political sweeteners which were designed to woo the electorate but which were actuarially unjustified. One such was the provision that a widow whose husband had been in insurable employment but who had died before the Act came into operation was entitled to a widow's pension if she had a child or children under the age of 14, but not if she had no children. These were the cpreAct' widows. In 1929 the Labour government introduced a second Widows', Orphans' and Old Age Contributory Pensions Act which extended pension rights to Cpre-Act' childless widows, but only from the age of 55. Not surprisingly, spinsters felt that widows had been treated very generously and they wanted similar concessions extended to themselves. In short, there was a chink in the armour protecting the contributory pensions scheme which the spinsters were determined to prise open a little further. The plight of the spinster had been realised for some time. During the passage of the 1929 Act, a Conservative MP, Robert Bourne, had attempted to introduce an amendment lowering the pensionable age for all unmarried women to 55, on the basis that the treatment of spinsters was manifestly unfair. In reply, the Labour Minister of Health, Arthur Greenwood, gave a foretaste of the controversy that was to develop in the late 1930s: to grant this concession would create 'an entirely new anomaly', he said, in that married women in insurable employment (and often experiencing the same job difficulties in middle age as spinsters) would feel aggrieved that they had to wait until the age of 65 for their pension. Bourne's amendment was defeated, and there were some interesting role reversals in this division. Supporters of the amendment included several prominent Conservatives (including Sir Kingsley Wood, the future Minister of Health) who later, as cabinet ministers in the National government, were to hold out against a lowering of the unmarried women's pension age; on the other side, the amendment was resisted by the same Arthur Greenwood who was to lead Labour's pensions campaign in the late 1930s.52 Such was the game of parliamentary politics. The NSPA: organisation and aims The National Spinsters' Pensions Association (NSPA) was based in Bradford, that cradle of so many radical social movements. It was a 52

HofC Deb., 5s, vol. CCLI, 14 Nov. 1929, cols. 2371-6.

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single-issue, mass movement, of broadly lower middle-class and working-class membership. Its national organiser and secretary was Florence White (1886-1961), and its chief parliamentary spokesman was William Leach, MP for Central Bradford. An affiliated offshoot was the Scottish Women's Pension League. White (whose fiance had died in 1917 as a result of the First World War) was a tireless, imaginative campaigner who skilfully forged links with MPs of all parties. The Association evidently touched a rich vein of smouldering discontent, for its membership grew rapidly. By December 1938 it had a membership of 140,000 (distributed over 104 branches) and in only four weeks in July 1937 it organised a petition to parliament containing one million signatures. (Typically of the Association, this petition was carried from Bradford to London in a decorated lorry, and triumphantly presented to the House of Commons.) Numerous social activities were organised for members; from 1938 a monthly journal, The Spinster, was published; and the Association's frequent mass rallies were designed to be joyous occasions, celebrated with processions, banners, bands, poems, marching songs, and so on - all very reminiscent of the pre-war 'constitutionalist' wing of the women's suffrage movement. Continued pressure was put on the government by forceful and imaginative methods (including the despatch of 12,000 Christmas cards to Sir Kingsley Wood, Minister of Health) and in November 1936 Florence White even contested a by-election at Preston (losing her deposit). The Association formed a parliamentary committee of MPs sympathetic to its cause (headed by James Guy) and sent deputations to government departments on several occasions in the late 1930s. The Association's 'Spinster's Charter', first published in 1936 and revised in 1938, requested that the pension eligibility age be lowered to 55 for single women who came within the scope of National Health Insurance, and also that 'women of slender means' who currently were not covered should be included in the contributory pensions scheme. They argued that, 'not being physically equal to men', women experienced greater difficulty holding on to employment in middle age ('especially with the present speeding-up of machinery'): women's work, being generally less skilled than men's, was more dependent on those physical abilities that declined in middle age. At a time of mass unemployment, male-dominated trade unions would exclude women from jobs more than ever. Hence working women were less able to maintain the regularity of contributions necessary to qualify for a pension at the age of 65. The NSPA quoted a 1937 Ministry of Labour survey which showed that private pension schemes tended to offer women a lower pensionable age than men. They also cited numerous

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cases of hardship where women had had to give up work to care for parents. For example, one member testified I was in domestic service, and paid from commencement of the Insurance Act 1912 [sic]. My age is 56 in June next, just now I am looking after my aged mother who is 86 and have had to help to support her for the last 36 years. I found I could not keep on paying, I was in benefit till last year and now they write and tell me it has lapsed. Granting pensions to spinsters at age 55 would only add £4,500,000 to existing pension costs of over £90,000,000, but would alleviate an area of real hardship.53 The strongest part of the spinsters' case was that which emphasised the hardships experienced by middle-aged unmarried women. A more contentious argument was that they were unfairly treated compared with other beneficiaries of the 1925 and 1929 Acts, for here the Association rested its case on calculations that were sometimes rather suspect. By the late 1930s, there were some 400,000 women receiving widows' pensions. They spanned a wide age range, and hence their average age was just over 55. In addition, 213,781 'pre-Act' widows received pensions in 1937. Thus the Association argued that over 600,000 single women were in pension at the age of 55. The 175,000 spinsters aged between 55 and 65 in insured occupations should also be granted a pension, given the hardship that they experienced. Spinsters felt particular grievance in those areas of Britain which had highly feminised workforces. (Not surprisingly, Bradford, with its textile mills, was one of these.) In such areas, a woman was much more likely to stay on at work after marriage. If she then became widowed, she would receive a widow's pension on top of her wages. She might be working alongside an unmarried woman of the same age who might feel aggrieved at this - especially when, in her fifties, her ability to stay in work was precarious, through physical decline. Perhaps nothing illustrates better than the spinsters' case the way in which the shift to contributory funding in 1925 threw a veil of mystification over the pension scheme, consolidating the political power of the actuaries within Whitehall and providing scope for endless, wearisome arguments over the technical relationship between contributions and benefits. Politically speaking, social insurance was highly anti-solidaristic, in that it was designed to individualise the notion of the right to welfare. It shifted the basis of discussion from concepts of rights and 53

National Spinsters' Pensions Association, The Spinsters' Charter (1938); 'Memorandum on the Aims of the National Spinsters' Pensions Association', by Florence White (1941), PRO CAB 87/79; pamphlets from the Association in PRO T 161/819 (S.33000/02).

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needs to the arcane complexities of actuarial science. Benefits had to be 'paid for' by an individual's contributions; the corollary was that an individual would feel resentment if his or her contributions subsidised other beneficiaries. Where pensions were concerned, contributory insurance had acted in a way that was highly divisive on lines of gender. The attitude of the NSPA perfectly illustrated this. In arguing its case, it took up a position that was highly sectional, representing only the single woman and resentful of the better treatment meted out to married women. At times, Florence White was also strongly antifeminist.54 This, of course, was also an indication of the divisions that existed within the inter-war women's movement, which have been highlighted by recent historians.55 Hence the Association argued that an unfairly high proportion of the spinster's contribution went to subsidise the pensions of widows, orphans and wives of men pensioners. A further complaint was that the contributory pensions fund gained a substantial income from accumulated contributions of spinsters who dropped out of employment in middle age, losing their entitlement to a contributory pension. These 'lost' monies must be going to other pensioners. Only some 80,000 spinsters (later adjusted down to 61,000) received contributory pensions each year; on the basis of highly contested calculations, the Association argued that this was an unjustly low number of eventual beneficiaries, given the number paying in at any one time. Again, it complained that, if a spinster died, her accumulated contributions were redistributed to other beneficiaries, whereas when an insured married man died his dependants received benefits. The Association particularly objected to the fact that spinsters had to pay National Health Insurance contributions that went to the financing of maternity benefit for mothers and the sickness benefit claims of insured married women (who, for obvious reasons, had higher claim rates than did single women). When an unmarried insured woman reached the age of 45, she still had to go on paying contributions for another twenty years towards maternity benefit and orphans' pensions, even though she would no longer have children. As William Leach put it: 'I cannot recall in any of our insurance laws or schemes any similar case where it can be said that an insured person has to go on making contributions towards benefits that are absolutely barred to the contributor at any future time.'56 Indeed, so sectional was Florence White's view that in 1944 she even protested at the unfairness of spinsters having to pay tax to fund the 54 55 56

Groves, 'Onward, Spinsters', p. 17. F o r example, Harold Smith (ed.), British Feminism in the Twentieth Century (1990). HofCDeb., 5s, vol. C C C X X X I , 16 Feb. 1938, col. 1993.

The pensions crisis of the late 1930s 57

315

forthcoming family allowance scheme. As a result, the NSPA attracted hostility from both feminist organisations and from women in the Labour Party and the TUC. 58 As with all pension developments, the Treasury kept a close watchful eye on the spinsters' campaign, with Sir Bernard Gilbert regularly circulating warning memoranda to his colleagues. Treasury officials took a rather sardonic delight in the spinsters' militant self-interest. They were also irritated by some empirical errors and inconsistencies in their case that repeatedly went uncorrected. For example, the Association claimed that, at any one time, 175,000 spinsters aged 55 and over were paying insurance contributions, yet only 80,000 were subsequently receiving pensions - thus implying a high drop-out rate. But they were comparing a ten-year contributing cohort (aged 55-64) with a five-year pensioned one (aged 65-69), and thus the former figure was bound to be double the latter.59 Despite it being pointed out to her, this mistake was frequently repeated by Florence White. Again, the Association claimed that, at any one time, some 4,000,000 unmarried girls and women aged 16-64 were paying contributions to a total of £4,500,000, but only £2,000,000 was going out in pensions to 80,000 unmarried women aged 65-69. This was also a fallacious comparison, since it was based upon a cross-sectional, 'snapshot' view of the female population. Spinsters were not a static class: a woman might be a spinster one day, a wife the next, and a widow the next. Four-fifths of the 4,000,000 women would marry: if one deducted their contributions, then the income coming in at any one time from spinsters who would never marry was only £1,750,000. Applying the same logic, one could say that there were 11,800,000 insured men between the ages of 16 and 64, yet only 490,000 male pensioners aged 65-69 - making it appear as though only one man in every twenty-four survived to claim a pension. Thus the most serious fault line in the Association's argument was one that arose from the inherent limitations of contributory insurance. Fundamentally, the Association objected to paying the standard women's contribution for benefits thereafter enjoyed by married women and widows. The only possible remedy for this was that spinsters should pay lower contributions throughout their working lives; this, however, was a logical absurdity, because it was impossible to identify in advance those women who would never marry in the course of their lives. Equity with the widow would be impossible to achieve because the latter's claim was based on contingency rather than on age or marital status. 57 58 59

Memoranda and correspondence in P R O P I N 8/69. Smith, 'Gender and the Welfare State', pp. 3 8 9 - 9 2 . B. Gilbert to G. Epps, 3 Feb. 1938, P R O T 161/819 ( S . 3 3 0 0 0 / 0 2 ) .

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Hence the fact that pensioned widows had an average age of 55 was completely irrelevant. In addition, comparison with the 'pre-Act' widow was invalid, because the latter was a disappearing group: in twenty years' time, they would amount to only 25,000. Quite simply, the process of risk-pooling through insurance necessitated some participants being losers - and these were the spinsters. Thus the only way that spinsters' pensions could be paid at age 55 would be by raising contributions from all women, and this would be politically unpopular. In general, Treasury officials considered that, actuarially speaking, the spinster had less to complain about than had the bachelor.60 But in addition it is clear that, from the very beginning of their campaign, the spinsters aroused the ire of civil servants for one reason above all others: they were women. It is not the purpose of this study to enter the murky realms of psycho-sexuality, but we may conjecture that this mandarin male hostility was particularly intense because these women were perceived to have led lives independent of men in a number of ways - sexual, social, domestic and occupational. They thus aroused the full force of unconscious male sexual hostility, and their campaign was treated with sarcasm and brutal contempt. 'It is not desirable that it should appear that this deputation is taken at all seriously!', instructed Gilbert at the time of the Association's first deputation in 1935, even though it consisted entirely of male MPs.61 One of the Association's aims was to make the public 'spinster conscious - whatever that may mean', minuted Gilbert caustically.62 Nine years later, the cause was the same, and the official reaction was much the same: 'Miss White is an importunate correspondent and I doubt whether it is necessary or expedient for the Minister to deal with the attached letter', noted one official in 1944.63 Throughout its dealings with women's organisations, the senior civil service, almost entirely male, operated on a level of thinly disguised contempt for most things female. At least the Spinsters' Association was not alone: the National Council of Women, for example, suffered similar treatment: 'If these bodies were reasonable people . . .', minuted Sir Thomas Sheepshanks wearily in 1944: 'Unfortunately, however, they are not reasonable people.'64 Another official drily commented that 'to ardent feminists a 60

61 62 63 64

T h e complex empirical arguments for and against the spinsters' case are discussed at length in the Report of the Committee on Pensions for Unmarried Women, 1939, Cmd. 5991. Gilbert to Playfair, 14 July 1935, P R O T 161/819 ( S . 3 3 0 0 0 / 0 2 ) . M e m o by Gilbert, 'Spinsters' Pensions at 5 5 . Brief, 16 July 1935, ibid. N o t e t o M r Stavely, 1 9 4 4 , P R O P I N 8/69. M e m o by T. Sheepshanks, 10 Feb. 1944, P R O P I N 8/48.

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concession to women is as much an abomination as a discrimination against them'.65 But behind this cloak-and-dagger sexism there lay a more 'rational' concern, which was to drive all internal Treasury verdicts on the spinsters' case. If the claims of the spinster were conceded, then it would be very difficult to hold the line there. Very soon all insured women would want pensions at the age of 55; then they would be demanded by wives of male pensioners at the same age. 'The proposal thus broadly comes to one for a lower pension age for women than for men', warned Gilbert, adding 'plus possibly even wider reactions on the contributory scheme'.66 Furthermore, men's expectations might be raised: as another official pointed out, 'adoption of this proposal would almost certainly give a considerable impetus to the demand, already strong, that the pension age for men should be reduced'.67 Defence of patriarchy was not the prime motive force behind this hostile stance. However powerfully it may have shaped the personal behaviour and private discourse of senior civil servants, it performed a secondary function as the distorting lens through which were directed essentially class arguments about the need to contain wealth distribution. For example, civil servants maintained that, without a retirement condition, a lowering of the pension age for women would result in their becoming a preferred class of employees, since they could then be paid less by employers (the pension making up the difference). The effect would be that 'men would be liable to be ousted from employment by this privileged class of women'. However, the concern was not to preserve a male monopoly: it was that 'anything which tended to restrict the openings for men in employment would fortify the demand for a reduction in the pension age for men', and this would be enormously expensive.68 The additional cost of lowering the pensionable age to 55 for all women would be £13,000,000 immediately, rising to nearly £20,000,000 in ten years' time. An added difficulty was that the span over which contributions could be paid would be reduced. Contributions would thus have to be raised by 6d per week from men and 3d per week from women; but the real concern of Treasury officials in the late 1930s was that workers would be willing to pay these higher amounts, thus weakening the contributory principle as a line of defence and

65

66 67 68

M e m o by M r Hutson, 'Deputation from the National Council of Women of Great Britain', Feb. 1944, ibid. M e m o by Gilbert, 'Spinsters' Pensions at 55'. W. S. Kinnear to B. W. Gilbert, 15 July 1935, P R O T 161/819 ( S . 3 3 0 0 0 / 0 2 ) . N o t e , 'Deputation to the Minister o n Spinsters' Pensions, 28th July 1936', ibid.

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leading on to demands (such as those made by the Association) that improvements should also be funded by raising the state's contribution. For three years, the Treasury managed to hold off the Association, but it was difficult because the spinsters' cause enjoyed support from many MPs (including supporters of the government), and the Association used them skilfully. The first deputation of MPs, led by James Guy, visited the Treasury on 18 July 1935. Duff Cooper, Financial Secretary to the Treasury, gave them a polite hearing, but said that he could not isolate the spinster for special treatment. Likewise, another deputation a year later to Sir Kingsley Wood, Minister of Health, achieved nothing - but Treasury officials realised that they might have to concede a committee of enquiry. Another year later (on 3 June 1937), Florence White put her case to Wood. Finally, on 16 February 1938 a House of Commons debate was held. William Leach introduced a private member's motion and made a powerful speech. At the end of the debate, the House decided by 150 votes to 98 to call for the establishment of an official committee. The resultant enquiry was appointed on 13 April 1938. Chaired by Charles T. Le Quesne, a King's Counsel, with five other members, it took evidence from relevant organisations and government departments, finally publishing its Report in April 1939. The Le Quesne Committee hacked their way through the dense thicket of empirical argument for and against the spinsters' case. Much of it was extraordinarily detailed and complex, and the essential points have already been mentioned. Basically, the Report acknowledged that there were cases of real hardship - it agreed, for example, that it was more difficult for women to retain employment in middle age than it was for men - but it subjected the Association's claims about actuarially unfair treatment to ruthless scrutiny and found many of them unjustified. At times, the influence of the Treasury was apparent - as when the Report warned that to relax further the 'free insurance period' could involve the virtual abandonment of the contributory principle.69 The Report confined itself to a summary of the principal arguments, and broadly rejected the spinster's case. Treasury officials concluded that the Le Quesne Report had torpedoed the spinsters' movement. But, at the same time, they realised that a delicate balancing act had to be performed: a small concession to the spinsters could be potentially dangerous, in that it might lead on to demands for a lower pension age for all women - and then for all men. However, such a concession could also be used to fend off pressure for 69

Report of the Committee on Pensions for Unmarried Women, pp. 2 6 - 7 .

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higher pensions across the board. As we shall see, this is precisely what happened a year later. The National Federation of Old Age Pensions Associations Without a doubt, the most important factor in late-1930s developments was the increased militancy by pensioners themselves. We have seen how, between 1916 and the early 1920s, a number of old age pensioner groups formed themselves together to create the National Conference on Old Age Pensions. In 1938, a similar coming-together took place, with the foundation of the National Old Age Pensions Association, which later changed its name to the National Federation of Old Age Pensions Associations (NFOAPA). For most of this period, its president was James C. Birtles, its secretary was H. W. Tyrell, and Ernest Melling edited its newspaper, The Pensioner. The Federation was a loose union of local pensioners' self-help bodies, pressure groups and clubs. Its purpose was to provide a national organisation for pensioner activism, and to achieve success by abrasive campaigning methods. The mute anger of pensioner social clubs, normally sublimated into 'respectable' time-killing activities like darts, billiards, skittles, bridge or bowls, was to be channelled into militant political action. Membership fees had to be kept low - one shilling per annum, which often had to be collected in monthly instalments because of the poverty of members. The NFOAPA was a working-class mass movement, which grew rapidly. The Blackburn branch, formed in October 1938 with just nine members, had 3,500 by February 1940, at which time the Federation united 400 local branches in England, Wales and Scotland. By 1942, some local branches had 3,000 to 4,000 members. In February 1940, The Pensioner claimed a national membership of over 2,000,000. There was, however, some vagueness of calculation: giving evidence to the Beveridge Committee, the Federation claimed 'well over a million' members.70 Its first petition to parliament, presented on 19 July 1939, boasted the remarkable total of 5,000,000 signatures. sIf every old age pensioner in the country will support us, asking the support of their children, and their friends, no government can resist you', declared The Pensioner. No person over the age of 50 should be outside the movement, it was argued, since they would soon find themselves approaching old age poverty unless something were done.71 The tone of the Federation's campaigning was radically socialist, 70 71

SIC(42) 1 lth Meeting, pt. I, 20 May 1942, PRO CAB 87/77. The Pensioner, February 1940 and March 1941. For an account of the history, aims and

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confrontational, avowedly working-class and deeply cynical of party politics. Originating in branches of the Independent Labour Party, it followed an extra-parliamentary strategy throughout its life. It saw little hope of working through the Labour Party, believing that the inherent constraints of parliamentary democracy - particularly the whip system made party allegiance the enemy of the pensioners' cause. It frequently took swipes at the lifestyles and salaries of those very MPs who refused to vote for higher pensions. For example, in early 1940 it pointed out that MPs had just awarded themselves a salary of £12 per week and a pension of £4 per week; by contrast, it quoted one of its members testifying: 'At age 65, I was too old and had to leave my job, my wife being only 62. All we have is my 10s Od for the two of us, and our rent is 7s Od per week, which leaves us 3s Od for everything else.'72 Likewise, it published details of the massive pensions that members of the establishment awarded themselves (with no means tests): in late 1942, these were £67 per week for a High Court judge, £38 per week for an exPrime Minister, £32 per week for a field marshal, £21 per week for an Admiral and £20 per week for a County Court judge. However, the federation was determined to use the potential of democratic politics to the full. Lacking any strike sanction and facing a rising tide of ageism, pensioners possessed only one weapon: MPs who failed to declare themselves in favour of higher pensions (and who failed to support higher pensions in a House of Commons division) should be made the target of a concerted campaign at the next general election so that they were unseated. 'Tell your MP what you want. Make it an order . . . Your MP is your servant - USE HIM', were the repeated instructions.73 The disillusionment with party politics was confirmed when Labour joined Churchill's wartime coalition in May 1940: having led the prewar campaign for an across-the-board increase in the basic pension, and committed itself to take action, the Labour Party now did nothing within government to implement that pledge. Only nineteen Labour MPs voted against the Determination of Needs Bill on 13 February 1941 (which, although relaxing the means-testing for supplementary pensions, still continued a system the Federation considered a deliberate obstacle in the way of universal pensions of £1 per week, with no means tests). Under the heading 'These are your friends', The Pensioner published the names of the nineteen (including Aneurin Bevan, S. O. Davies, Willie Gallagher, James Maxton, Manny Shinwell, Sidney 72

methods of pensioner activism, see Andrew Blaikie, 'The Emerging Political Power of the Elderly in Britain', Ageing and Society, vol. 10, pt. 1, 1990, pp. 17-39. 73 The Pensioner, Feb. 1940. The Pensioner, March 1940 and Jan. 1941.

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Silverman and George Strauss); also published were the names of the 173 'enemies', who had voted for the bill.74 The Labour rebels were subsequently carpeted by their whips' office. What is striking about the Federation's uncompromising tactics is that they were based on the perceptive understanding that governments would do anything to head off the demand for universal, adequate pensions. We can speculate that being poor, largely immune from income tax and at the end of their lives, pensioners possessed a militancy that was peculiarly urgent and reckless. The Federation thus refused to be impressed by the arguments for national economy. In this respect, its case was boosted by the rise in defence expenditure that took place at the end of the 1930s. And once war broke out, the Federation was positively ecstatic: in its early months, the war was costing £6,000,000 per day, yet the government claimed that it could not afford the £143,000 a day it would take to give two million pensioners an extra 10s Od per week.75 To the Federation, this level of military expenditure made a nonsense of pre-war claims that universal pensions of £1 per week would, as one government spokesman had put it, 'imperil the financial stability of the state'.76 The Federation's 'six-point charter' laid out clear demands: an increase in the pension to a minimum of £1 per week for men and women; the relative value of the pension not to fall if the cost of living fell; the wife's pension to be paid, without any deduction, at the same time that the husband qualified; a lowering of the eligibility age to 60; the removal of the 'stamp qualification' (i.e. the winding-up of contributory pensions); and the provision by local authorities of suitable houses at affordable rents. All means tests were to cease: the Federation regarded means-tested supplementations, whether by Public Assistance Authorities or (after 1940) the Assistance Board, as humiliating and degrading to those who had contributed to society during working age - 'when the Investigation Officer goes into the home he never asks what the old people need, he always asks what they have got', complained one Federation leader to the Beveridge Committee77 and designed to weaken the Federation's case for adequate pensions for all as of right. Besides, means-testing punished thrift. Thus at a time when the Treasury was quibbling over whether £4,500,000 could be spent in meeting the spinsters' claim, the Federation was asking for a pension scheme that would have cost a total of £240,000,000. This radical socialist stance caused enormous concern 74 76 77

75 The Pensioner, April 1941. The Pensioner, Feb. 1940. Captain Euan Wallace, HofCDeb., 5s, vol. CCCXLIV, 2 March 1939, col. 1475. SIC(42) 11th Meeting pt. 1 (Oral evidence by NFOAPA), 20 May 1942, PRO CAB 87/77.

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within Whitehall. Tribe warned his colleagues that the Federation was 'most violently anti-Government', and should be met with a counterpropaganda campaign.78 The Treasury's tactic for dealing with the Federation was quite simple: it was completely ignored, and thus marginalised from the policy-making process. Though Sir John Simon, when Chancellor of the Exchequer, was willing to listen to demands from other quarters (especially from MPs or the TUC), knowing that these demands could be stonewalled or outmanoeuvred, he 'consistently refused to receive a deputation from the Old Age Pensions Organisations', as Frank Tribe commented.79 The Federation's radical and massively expensive demand was the spectre that lurked behind all other much more moderate proposals steeling the Treasury's resolve to resist any pension improvements, however small; for its demands represented the last point on the 'domino effect' of small concessions that the Treasury so feared. Largely written out of the history books, the Federation's campaign was to be a major reason for the appointment of the Beveridge Committee in 1941. TUC pressure These slowly increasing pressures on the Treasury received an important boost in 1938-9, when the TUC added its formidable weight to the pensions campaign in support of the Labour Party scheme. The shift to contributory-funded pensions in 1925 had presented the TUC with something of a dilemma - as, indeed, it had been partly designed to do but its leaders had responded pragmatically. They did not necessarily like social insurance, recognising all the fiscally conservative arguments that underpinned it, but they acknowledged that it did deliver benefits on a firmer basis of entitlement than did a means-tested, tax-funded system. For example, the 'divide and rule' aspect of the two-tier insurance/assistance structure of income maintenance for the unemployed was objectionable to many trade union leaders. Typical of this was J. L Smyth's protests to the Unemployment Insurance Statutory Committee in 1935 that there should be 'no distinction between the two classes as citizens . . . The persons coming within the scope of Part II of the [1934] Act were decent citizens and should be treated as such'.80 On pensions, TUC leaders recognised that they had been presented with something of a. fait accompli^ and that it would not be possible to turn the 78 79 80

Tribe to Barlow, 13 Feb. 1939, P R O T 161/930 ( S . 4 2 1 7 9 / 0 1 ) . Tribe to Winnifrith, 15 Nov. 1938, P R O T 161/930 ( S . 4 2 1 7 9 / 0 1 ) . 'Minutes of the U n e m p l o y m e n t Insurance Statutory Committee for 7 Feb. 1935', Beveridge Papers V I I I 4 .

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clock back to before 1925. Thus Ernest Bevin insisted that the TUC had always favoured non-contributory pensions, and had regretted the partial change in 1925. But henceforth they had accepted the contributory principle, 'in order to try and get a scheme through, in order that we should not have to run the gauntlet of party conflict'.81 This pragmatism impelled the TUC to support Labour's idea of more of a pay-as-you-go system of pension funding, via what was called 'collective computation'. Labour's Pensions Plan proposed to fund its higher pensions by increased contributions from employers and employees, with no additional Exchequer subvention. This was a difficult argument for the Treasury to oppose, as TUC leaders well knew. Labour's scheme could not be countered by the usual arguments about the intolerable burden on the hard-pressed taxpayer or the implications for public expenditure at a time when defence spending had to rise. The only negative arguments related to the ability and willingness of workers and employers to pay. And here the Treasury was on weak ground because, compared with the TUC, its claims to represent either workers or employers were not exactly convincing. On many occasions in the 1930s, the TUC had argued that workers would be prepared to pay higher contributions for better benefits.82 In addition, the TUC could argue that it was offering younger workers something in return for the proposed higher contributions: through the operation of the retirement condition, there would be more jobs liberated for younger workers to take up. Finally, there would be savings in unemployment benefit and assistance, and in those pensions not taken up by those who wished to continue work past the age of 65. These were basically the positions taken up when the TUC General Council sent a deputation to the Treasury on 15 February 1939. Unlike less important bodies, the TUC was graced with the presence of the Chancellor, Sir John Simon. Though disliked on a personal level by political colleagues, Simon had a brilliant mind and was a formidable debater. He was becoming increasingly concerned about the upward spiral of public expenditure at this time, owing to rearmament, and was determined not to enter into any expensive social policy commitments.83 The TUC leaders began by insisting that the existing 10s Od pension was inadequate, and needed radical improvement. They were unconvinced by government arguments that the ageing of the British popula81

82

83

'Deputation to Chancellor of the Exchequer from Trades U n i o n Congress, 15 February 1939. N o t e Taken by Treasury Reporter', P R O T 161/941 ( S . 4 4 3 3 0 ) . For example, 'Minutes of the Unemployment Insurance Statutory Committee for 9 Jan. 1936', Beveridge Papers V I I I 4 . David D u t t o n , Simon. A Political Biography of Sir John Simon ( 1 9 9 2 ) , pp. 2 7 7 - 8 .

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tion made this financially impossible, maintaining instead that productivity and national wealth would increase sufficiently over the next forty years to make this achievable. The additional contribution from workers of Is Od could easily be afforded by them (and could be less if the Exchequer subvention was raised). 'Collective computation' would front-load the funding, and young workers would be willing to accept this: Bevin gave examples (such as Imperial Chemical Industries) where he himself had been able to negotiate a company retirement pension scheme willingly financed by younger workers. Simon gave the TUC leaders a polite hearing, but he refused to be swayed by their arguments.84 84

'Deputation to Chancellor of the Exchequer from Trades Union Congress, 15 February 1939'.

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The Treasury enquiry and the 1940 Act

'I do not think we can contemplate this kind of thing either now or in the future', was one anonymous Treasury official's verdict on the TUC proposals.1 But this was wishful thinking. By 1939, the pressure begun by Labour in the mid-1950s had built up to a climax, drawing in support from all sides until pensions had become virtually an all-party issue. The growing confidence of the broad 'middle opinion' movement was one factor. Another was the imminence of a general election (which would have had to be held in 1940): politicians of all parties realised that there was powerful feeling in their constituencies on the pensions issue. Increasing concern was felt by those Conservatives with narrow majorities, or with seats in the north of England where unemployment was acute and pensioner poverty consequently greater. Electorally, the National government was not an impregnable fortress, and there was no guarantee how long it could continue. Once it collapsed, conventional party politics could return with a vengeance: there could well be a replay of 1922-4, with social reform high on the agenda of each party's election promises. In order to avoid such a collapse, some concessions would have to be made on the pensions front, if only to take the wind out of Labour's sails. This was the Treasury's real dilemma in 1939: small concessions might produce the 'domino effect', and inexorably rising expenditure; no concessions at all might be electorally disastrous for the Chamberlain government. As we shall see, the senior civil servants believed they could bluff things out; by contrast, the politicians were much more responsive to electoral pressures, and took fright. Growing pensioner militancy in the constituencies was reflected in an upsurge of activity within parliament. The publication of Labour's Pensions Plan spurred on the efforts of the small but vociferous group of Labour MPs in the House of Commons who had links with the National Federation of Old Age Pensions Associations and who had been pushing the issue since the mid-1930s, and they managed to arouse the rather 1

Note of 21 Apr. 1939, PRO T 161/941 (S.44330).

325

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The 'Beveridge revolution5

somnolent interest of the party's parliamentary leadership so that pensions became an issue with which to goad the Chamberlain government. Throughout 1938 and 1939, there was much discussion of pensions in parliament against the background of an impending war. A long debate, initiated by Gordon Macdonald, was held on 1 December 1937. Macdonald basically presented Labour's new scheme to the House, arguing that old people were 'entitled to be in that position of retirement in decency and comfort'. Conservative MPs replied with the argument that expenditure on such a scale would threaten the financial stability of the nation.2 On 23 February 1938 in the House Willie Gallagher extracted a promise from the government that a deputation of MPs would be received, and thus on 2 March six Labour MPs (including Gallagher, Tinker and Ellis Smith) and one Liberal (Wilfred Roberts) visited the Treasury.3 Again, on 23 November 1938, J. J. Davidson (Labour MP for Glasgow Maryhill) introduced a motion in the Commons on the inadequacy of the 10s Od pension, both as a means of income support and as an encouragement to retirement.4 It is important to remember, given the subsequent discussion of a retirement condition by Beveridge, that Labour always viewed it as an essential corollary of introducing a retirement condition that pensions should be 'adequate' in amount (at this stage, £1 per week). The most immediate concern in all political circles was over the desperate plight of the household of a male worker who was made redundant at the age of 65 and had a younger wife. The two of them would then be forced to live on 10s Od per week; rent might be 6s Od to 7s Od per week, leaving a tiny margin for food and all other expenditure. If such a man were unemployed, he would find his unemployment benefit (with its dependant's allowance, amounting in total to 27s Od per week) ceasing on his sixty-fifth birthday, and would be in a similar position. Even the Unemployment Assistance Board's scale for a single person was 17s Od per week. Most advocates of the pensioners' cause believed that there were many older workers who were pitifully clinging on to employment, totally at the mercy of their employers (often, as we have seen, suffering wage cuts as a quid pro quo for keeping their jobs), for fear of finding themselves in this poverty-stricken situation. A retirement pension, adequate enough to live on, would be welcomed by such 'worn-out' workers; the jobs they vacated could then be taken by the young unemployed. 2 3 4

HofCDeb., 5s, vol. CCCXXIX, 1 Dec. 1937, cols. 2097-160. 'Old Age Pensions. Note of Discussion between the Financial Secretary and Members of Parliament', 2 March 1938, PRO T 161/930 (S.42179). HofCDeb., 5s, vol. CCCXLI, 23 Nov. 1938, cols. 1793-1855.

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By 1938-9, all-party pressure was becoming intense. In November 1938 Frederick Pethick-Lawrence pledged that Labour, if elected, would implement its pensions plan and the party's pamphlet, Pensions and You (1939) reiterated this.5 On 27 June 1939, a petition bearing 80,000 signatures and organised by local Liberal Associations, MPs and candidates, was presented to the Prime Minister by Graham White, Wilfred Roberts, Harcourt Johnson and four old age pensioners.6 Unease was also spreading to the higher echelons of the Conservative Party. Walter Elliot, the new Conservative Minister of Health who was on the liberal wing of his party, was pressing for something to be done for the wives of pensioners who had previously been unemployed. Within Conservative Central Office, there was growing concern over the possible electoral gains Labour might make on the issue - especially in north of England seats.7 The Conservative Party's Labour Sub-Committee had examined several schemes (including that of W. A. Grierson, referred to in an earlier chapter), and persuaded the Executive Committee to send a deputation to Neville Chamberlain on 10 February 1937. Chamberlain stonewalled successfully, using the familiar arguments about the inherent limitations of contributory insurance preventing the exclusion even of recognised cases of hardship such as wives of pensioners who had been unemployed. He acknowledged that there was poverty in certain sections of the pensioner population, but warned the deputation that concessions would only lead to further demands, such as from the spinsters.8 However, there was growing disquiet over the fact that, where social policy was concerned, the recipe of 'safety first' could not be applied indefinitely. Backbench Conservative unease began to filter through to cabinet ministers with increasing urgency. A warning was sounded in early 1938 by Robert Smellie, secretary and agent of the Whitehaven Division of the Cumberland Conservative and Unionist Association. Writing to Marjorie Maxse, chief organiser at Conservative Central Office, Smellie believed that Labour's proposal was gaining support among working-class Conservative voters. 'As an election stunt it will pull tremendous weight', he warned, referring to the Labour plan: 'The desire for adequate pensions is peculiar to no one section of the community, it is inherent in us all, the hope for independent security in 5 6 7

8

Ibid., col. 1844. Labour Party, Pensions and You (1939). PRO T 161/1395 (S.42179/02). John Ramsden, The Making of Conservative Party Policy. The Conservative Research Department Since 1929 (1980), p. 91. 'Deputation to the Chancellor of the Exchequer from the National Union of Conservative and Unionist Associations re Contributory Old Age Pensions, Wednesday 10th February 1937', PRO T 161/900 (S.33000/031).

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our old age'. He pointed out that means-tested unemployment assistance had set a standard of minimum needs, which pensions were now well below. In debating the issue with working-class members, Smellie had found resentment that industries could apparently afford to run their own private schemes but would not put more into the state scheme; most of his members believed that working people would be prepared to pay higher contributions. He warned of the electoral consequences of a 'do-nothing' approach, especially in the marginal constituencies. 'The government should in its next election programme undertake to generously revise the pensions scheme', he suggested, adding that: Unless the government announce a scheme of revision for pensions we shall, at the next General Election, take the platform with nothing but destructive criticism of the Socialist scheme with nothing constructive to offer in its place. We shall be forced to champion pensions as now operating and protect all the defects of the present system. Truly a weak position.9 Another example of grass-roots unease was a letter passed on to Sir John Simon, the Chancellor of the Exchequer, by William Wakefield, Conservative MP for Wiltshire (Swindon division). Written by a working-class Conservative activist in Swindon, W. H. Bickham, the letter was blunt and to the point. The old age pension was becoming a big political issue, warned Bickham. Ordinary people could not understand why middle-class retirees (who had the ability to save for their old age) ended up with an occupational pension sometimes only a little less than they had been earning, yet those on low wages (who could not save money) received a state pension that was woefully inadequate; it was foolish and politically dangerous for government ministers to use the public assistance statistics to reassure the electorate, since everyone knew them to be false; many life-long Conservatives were concerned by the government's lack of action - 'the world problem will be entirely submerged by this issue at the general election', he concluded.10 In similar vein was the letter sent by Nevil Beechman and four other Liberal National MPs (i.e. government supporters) to Sir John Simon in July 1939. 'You have probably been told from many sides how strong is the feeling in the country', they wrote: they could confirm this from their own constituencies. 'It is an issue which may decide the fate of many seats', was their nervous comment. There would have to be a real improvement in the pension, because of the undeniable poverty of many elderly. 'We think that it is a mere matter of time 9 10

Robert Smellie to Miss Maxse, 15 Feb. 1938, PRO T 161/900 (S.33000/03). W. H. Bickham to William Wakefield, 14 July 1939, PRO T 161/994 (S.45029/1).

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before the government will be forced to do something'. It is clear that senior ministers and Conservative Party organisers were receiving many such letters at this time: 'I need not tell you of the feeling in the country in connection with old age pensions', wrote the chairman of the Conservative Party to Walter Elliot.12 It is interesting to pause for a moment and cast an eye over the electoral majorities in the constituencies of some of these increasingly apprehensive backbenchers. Cumberland Whitehaven division was a marginal Labour seat (majority of 352); clearly, Smellie believed it would not be won back by the Conservatives unless his party could beat Labour at its own game. William Wakefleld's majority in Swindon was only 975, and Nevil Beechman's was 210. The two ministerial figures were also vulnerable: Simon's majority was 642, and Elliot's was only 149. The reply to Labour's challenge in the Commons by loyal Conservative MPs, acting on orders from above, was to argue that, in view of high public expenditure on the rearmament programme, doubling the pension would 'imperil the financial stability upon which depends the well-being of industry'.13 But this was merely holding a finger in the dyke, for over the course of 1938 and 1939 the pensions issue was repeatedly raised - to the growing unease of the party's liberal wing. The Labour MP J. J. Davidson was quite correct when he warned the House that pensioners were organising in every constituency.14 On 2 February 1939 a deputation of MPs went to the Chancellor the Exchequer, Sir John Simon, followed by one from the TUC on 15 February. On 2 March, the Labour MP David Kirkwood called upon the Chancellor to pay pensions at the age of 60, and many petitions from pensioners in different constituencies were presented by MPs to the House.15 During the next month the LeQuesne Report was published, and for all its anodyne recommendations it kept interest alive. Treasury concerns 'There are about two-and-a-half million old age pensioners, and if these are organised to vote on the subject at the next general election, it may well become a first class issue', minuted Tribe uneasily in February 11 12 13

14 15

Letter from N. A. Beechman and others to Simon, 25 July 1939, ibid. Douglas Hacking to Walter Elliot, 10 July 1939, ibid. H of C Deb., 5s, vol. CCCXLI, 23 Nov. 1938, col. 1806; for whole debate, cols. 1793-1855. Ibid., col. 1794. Ibid., vol. CCCXLIV, 2 Mar. 1939, col. 1475; ibid., vol. CCCXLIX, 26 June 1939, col. 22; ibid., vol. CCCL, 19 July 1939, cols. 367-8, and 27 July, cols. 1617-8.

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1939 as he observed the rapid growth of the National Federation.16 As ministers took stock of this growing parliamentary and popular pressure, the senior civil service simultaneously came to their aid, illustrating perfectly the symbiotic and often sycophantic relationship between the political leaders of the National government in the late 1930s and their ever-loyal Whitehall mandarins - a relationship which flagrantly breached the proclaimed conventions of bureaucratic impartiality. It is no exaggeration to say that, by the late 1930s, senior civil servants saw one of their principal tasks as securing the re-election of the National government, and thus they worked flat out to defuse the crisis over old age pensions. The Chancellor of the Exchequer, Sir John Simon, directed this offensive. Counter-propaganda on the pensions issue was to be conducted by the three main political parties supporting the National government. Simon also asked Tribe to draw up a memorandum setting out the principal reform options 'without astronomical expenditure', by using a means test or by raising the employer's and employee's contribution (but not the Treasury's).17 Tribe's task was frankly political - the utilisation of a senior civil servant for general election manifesto purposes: his contribution was to be 'some personal suggestions from myself and not an official Treasury memorandum', as he rather warily commented, adding that the ideas therein were offered 'on my own personal responsibility only'.18 The resultant advice showed that Tribe's 'personal' views were uncannily close to those of the Treasury and the Conservative Party. As Tribe saw it, there were four possible reform options under discussion. The first was to do nothing, on the justification that at least 80 per cent of pensioners were apparently not in serious hardship, and that public assistance was available. But this line would be very difficult to hold, given the intensity of political pressure. The second option was to meet the most glaring anomaly and allow pensioners to draw a married couple's pension of 20s Od per week if their wives were aged 60 to 65. There was a danger that this could strengthen the spinsters' case, but Tribe was confident that the contributory principle could be used to outmanoeuvre them: the man's pension contribution could be raised by I d a week to fund this improvement (though in fact it would raise only £2,400,000 out of the £4,000,000 required). Tribe's third alternative was to keep the existing contributory scheme as it was, but to transfer responsibility for maintenance of the aged poor 16 17 18

Tribe to Barlow, 13 Feb. 1939, PRO T 161/930 (S.42179/01). Tribe to Barlow, 16 Feb. 1939, PRO T 161/930 (S.42179). Tribe to Miss Culhane, 19 July 1939, ibid.

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from local authorities to central government (i.e., the Unemployment Assistance Board). Finally, there was the possibility of adopting the TUC's 'collective computation' method of funding, whereby higher contributions would be levied from new entrants in order to fund an across-the-board improvement in the pension, conditional upon retirement (which would effect some savings). Tribe was hostile to this option. He doubted whether a retirement condition could be made to work. And, yet again, he raised the over-riding fear that the introduction of such a scheme could weaken the contributory principle that was a vital line of defence. As he put it, 'There are great dangers in such a change since it would open the door to further "improvements" in the scheme out of ordinary taxation or at least without any actuarial relation to the contributions received.' This fourth option was thus firmly ruled off the agenda by Tribe. He presented Sir John Simon with only the first three policy options, minuting: 'I have not included the obvious proposal for increasing the rate of pensions all round since any large increase would involve prohibitive expenditure and the Chancellor himself said that a small increase would only lead the way to competitive promises by different Parties.'19 Finally, on 27 July 1939 matters came to a head when Arthur Greenwood made pensions policy the basis for a vote of censure against the government. (Eight days earlier, the National Federation petition containing 5,000,000 signatures had been presented to parliament.) During the debate, there was considerable all-party disquiet over the pensioners' plight: the Liberal Graham White, that quintessence of late-1930s 'middle opinion', spoke of the 'overwhelming mass of opinion in the House which wishes something to be done, and to be done as soon as possible',20 and a parade of backbenchers supported him. Early in the debate, Neville Chamberlain made a fairly conciliatory speech, designed to forestall a possible rebellion within his own party: while warning of the fiscal costs of an ageing population, and arguing that defence expenditure made an across-the-board increase impossible, Chamberlain nevertheless admitted that the basic 10s Od was not enough to live on and promised that an official enquiry would be undertaken by the Treasury. Labour's motion of censure was easily defeated but there was sufficient all-party backbench unease to carry a Tory amendment calling for some pension improvements.21 Over the next six months, this enquiry took place. 19 20 21

Memo by Tribe, 'Old Age Pensions', 19 July 1939, ibid. HofCDeb., 5s, vol. CCCL, 27 July 1939, col. 1720. Ibid., cols. 1697-1819.

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The Treasury enquiry The 27 July debate seems to have acted as a turning point. The extent of the unhappiness felt by National government supporters on the backbenches shocked Chamberlain and Simon into action, and henceforth they assumed greater control over the making of pensions policy. This was interesting, for it illustrated the receptiveness of the politicians to the pressures of democracy, particularly when such pressures came from their own MPs worried about their constituency majorities. Prior to this debate, the influence of the senior civil servants had steadily grown until it reached remarkable proportions. A vivid illustration of this mandarin power is Frank Tribe's role in preparing Chamberlain and Simon for the crucial 27 July debate. Tribe did all the things that senior civil servants do - writing briefing papers, drafting letters and parliamentary replies from Simon, negotiating with deputations and, as we have seen, firmly instructing ministers on the only range of options that the Treasury were prepared to countenance. But on several occasions he flagrantly exceeded his constitutional role, becoming a fully-fledged political apparatchik and revealing the gatekeeping power of the higher civil service at this point in British political history. Tribe's political enthusiasm was such that he took the initiative in advising Simon on precisely what he should say in the 27 July debate. The line to take should be that the entire pensions controversy had been partly caused by the 'too defensive and apologetic' attitude adopted by government supporters. He went on: Offence is the best defence, and if the Chancellor in concluding his speech on Thursday could show that the Labour Party by their motion are really playing a sordid political game and betraying the true interests of democracy, I believe it would convert many doubters on his own side and set the right tone for the campaign that is to follow. Tribe believed that the formation of the National Federation of Old Age Pensions Associations had introduced a new and 'pernicious' element into the democratic process: large single-issue interest groups (for example, pensioners, the unemployed or ex-servicemen) could cut across the 'true democratic electoral system . . . betraying the sound principles of democracy'. He could not understand why the pension agitation had recently blown up, other than that the state was now spending much more on defence and hence had revealed that it had money to spend: but this was an argument 'that may appeal to sentiment but can have no appeal to reason'. There was 'no logical reason' for the

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agitation, other than 'a desire to embarrass the government' by the Labour Party which had 'given up all hope of assuming the government of the country for many years to some'. Tribe concluded his draft for the Chancellor with a rousing purple passage: Democracy is a splendid heritage, of which we are all justly proud. At the present time democracy is being openly challenged by other systems of government. The true merits of democratic government are being tested as they have seldom been before. Will it fail? Much depends on the way we vote tonight. If the people of this country show themselves unable to accept sacrifices, if they shut their eyes to the grim realities of life and vote themselves pecuniary benefits which they cannot afford, then I can see no future for this nation or for democracy. But if, as I believe, they shoulder their responsibilities manfully, if they accept any sacrifice that may be demanded of them, and if they reject the soft enticements of irresponsible vote-catchers, then I see the dawning of a yet brighter day and the justification of our faith in the principles of democracy.22

It was a remarkable piece of political gaucherie, but highly revealing of the Treasury mentality. Not surprisingly, those wily political operators Simon and Chamberlain felt able to refuse Tribe's clumsy offer of help. Clearly shaken by the vote of censure debate, they were galvanised into action. The promised Treasury enquiry was quickly launched - under Tribe's control. Throughout July and August, various options were explored by Treasury civil servants (some of whom cancelled or foreshortened their summer holidays because of the political urgency of the enquiry). The most obvious course of action was to capitulate partially to Labour's demand and raise the pension to 15s Od (single) and 30s Od (couple), funded by higher contributions, and to lower the eligibility age for a pensioner's wife to 60. But Simon realised - as the Le Quesne Committee had realised - that in practice it would be very difficult to differentiate between groups in the older female population. If this lowered age were conceded to married women only, then the spinsters would be outraged: a married woman might never have contributed to a pension in her own right, yet receive it at 60; a single woman might have contributed all her working life, yet have to wait another five years. The only solution would be to lower the age to 60 for all women. Simon also discussed the possibility of transferring supplementary assistance from local authority Public Assistance Committees to central government control under the Unemployment Assistance Board (UAB). One of the fall-back options considered by the Treasury in the late 1930s, this was attractive for several reasons: it could be used as a 22

Memo by Tribe, 'Vote of Censure. July 27th, 1939', 24 July 1939, PRO T 161/994 (S.42179/03).

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cheap alternative to an across-the-board pension increase, targeting the very poorest; it would relieve the rate burden on businesses in high unemployment areas; and, finally, it would 'take relief out of politics' in the case of pensioners as had been done for the unemployed when the UAB had been established in 1934. This last advantage had been pointed out by Douglas Hacking, MP (chairman of the Conservative Party), as a way of removing the pensions issue from democratic pressures and stopping what Hacking saw as the competitive 'bidding' between political parties. Hacking's suggestion of a special Statutory Committee to run the entire pension scheme was kicked around Whitehall and aroused some interest; but it was felt that, while this worked successfully with the unemployed (whose misfortune tended to be shorter-term), it might not work with pensioners.23 Tribe was attracted to it: it could serve as an 'automatic check', protecting the Treasury from 'vote-catching promises' by taking pensions 'out of the field of political controversy'.24 Likewise, when announcing the introduction of this policy to the cabinet in January 1940, Sir John Simon stressed that the new means-testing supplements should be 'entrusted to some efficient organisation which would work under government control but should be removed as far as possible from the political field.'25 The great danger with this course of action, however, was that if means-tested supplements grew in scope and became liberalised in administration, they would begin to resemble the 1908 non-contributory pension scheme. The Treasury's subvention would inexorably rise, making the whole exercise self-defeating. As Bernard Gilbert warned in December 1939, 'the attraction of this scheme is proportional to the extent to which it avoids increase of pension': if claims grew in number, the scheme would become unattractive to the Treasury 'because we should incur most of the expense which it was designed to avoid but at the same time have waived our claim to charge this expense in some part against contributions'. From the Treasury's point of view, the success of the scheme would thus depend upon the rigour of the means test.26 The better line of defence was the contributory principle. But with Labour pressing for a substantial rise in pensions and contributions to fund them, the Treasury could end up paying out more. Both courses of 23

24

25

26

Hacking to Elliot, 10 July 1939 and Elliot to Simon, 13 July 1939, P R O T 161/994 (S.45029/1). M e m o by Tribe, 'Old Age Pensions. S o m e Provisional Suggestions as to the Broad Lines of Reform', 17 August 1939, P R O T 161/994 ( S . 4 5 0 2 9 / 2 ) . M e m o by Tribe and Simon, 'Draft Covering Paper for the Cabinet. Old Age Pensions', 28 D e c . 1939, P R O T 161/995 ( S . 4 5 0 2 9 / 5 ) . This was essentially the paper presented to the cabinet o n 16 January 1940. M e m o by B. W. Gilbert, 6 D e c . 1939, P R O T 161/995 ( S . 4 5 0 2 9 / 5 ) .

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action contained unpredictable fiscal hazards: this was the Treasury's painful conundrum. Finally, the retirement condition came under scrutiny. One distinct possibility was to make the 5s Od pension increase conditional upon retirement. Civil servants still tended to be very dismissive of it as pointless, unworkable and contrary to the insurance principle. But with a politician's open-mindedness, Simon thought it 'perhaps needs further analysis . . . if it could be worked, is it necessarily objectionable?'. Neville Chamberlain thought that it could be made to work, but again posed the question (as he had done on several other occasions in the late 1930s): 'would workers agree to pay an extra premium all their lives for an extra benefit which was subject to a special kind of means test?'27 As these options were passed around between different government departments, civil servants realised that they were in a quandary. The extent of political pressure demanded that something impressive be done. Even Tribe acknowledged that it would be difficult to grant a pension increase in just one area, for those groups excluded would remain unsatisfied and vociferous. He argued that 'For political if for no other reason it would be well, if we make any change in the present scheme, to make it a pretty radical change so as to make it very difficult for critics to compare our new scheme either with the Labour Party's scheme or with the existing scheme.'28 This was an interesting comment, in view of the appointment of the Beveridge Committee just two years later. But to fund such a radical improvement by increased contributions on the lines of Labour's suggestions would mean, warned Sir George Epps (Government Actuary), that such contributions would 'lose the character of insurance premiums and become a tax on wages', and this would open the way to demands that the scheme be tax-funded anyway.29 As Britain moved inexorably towards war with Germany in the hot summer of August 1939, Treasury civil servants found themselves trapped within a very difficult dilemma. Treasury enquiry and the 1940 Act The outbreak of war on 3 September 1939 appeared to have resolved the pension crisis by giving the Chamberlain government some breathing space. Tribe was now confident that no major change in the 27

28 29

M e m o by Simon to the Prime Minister, 'Improvement in Old Age Pensions', 31 July 1939, and handwritten c o m m e n t by Chamberlain, P R O T 161/994 ( S . 4 5 0 2 9 / 1 ) . Tribe to Epps, 31 July 1939, ibid. Epps to the Chancellor, 16 Aug. 1 9 3 9 , P R O T 161/994 ( S . 4 5 0 2 9 / 2 ) .

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pension scheme was possible, but he did recognise that there would still be demands in parliament, especially if wartime inflation further eroded the position of the poorest pensioners.30 Even a modest all-round pension increase - say to 12s 6d per week - was seen as less desirable than ever. It would be inflationary (a real concern at the start of the war), it would be administratively difficult to introduce in wartime and it would be even less needed by those pensioners re-enlisted into the labour force by the new wartime economic opportunities. Clearly, Sir John Simon and his Treasury team were, with some relief, groping their way towards what appeared to be the cheapest and most effective option - introducing a new supplementary scheme for only the poorest pensioners.31 Continued pressure from MPs in the House of Commons was met with a prime ministerial reply on 13 September that, in the new emergency conditions, an increase in the pension was impossible, and hence the Treasury enquiry had been suspended.32 However, backbenchers refused to be fobbed off: on 18 October, J. J. Tinker asked for parliamentary time for a motion calling for pensions of £1 per week, and the Labour leader, Clement Attlee, spoke of 'the concern in all parts of the House on the question of old age pensions'.33 Chamberlain did his best to ignore this pressure, but it continued throughout October. Finally, on 1 November the House of Commons debated pensions for over six hours. The attack was launched by Attlee himself, seeking an 'immediate improvement' in the position of pensioners, and pointing to all the personal distress and social disruption that old people were suffering in wartime. The all-party concern over the issue was symbolised by the Liberal Graham White acting as seconder to Attlee's motion, and a string of speeches from MPs calling for immediate action. The House defeated Labour's motion, but passed a more moderate Tory amendment seeking a re-activation of the Treasury enquiry.34 Throughout November and December 1939, MPs kept up their campaigning, and on 2 December there was another debate, of four hours duration. Accordingly, Sir John Simon and his civil servants returned to their task. Any across-the-board increase in the pension would necessitate higher contributions from workers and employers, and thus the views of the TUC and the employers had to be sought. On 15 November a TUC General Council delegation visited the Treasury. On the TUC side were 30 31 32 33

Tribe to Barlow, 8 Sept. 1939, P R O T 161/994 (S.45029/3). Simon to Prime Minister, 27 Oct. 1939, ibid. HofCDeb., 5s, vol. C C C U , 13 Sept. 1939, cols. 6 4 6 - 7 . Ibid., 18 O c t . 1 9 3 9 , col. 8 7 1 .

34

Ibid., 1 Nov. 1 9 3 9 , cols. 1 9 7 1 - 2 0 7 4 .

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R. M. Hallsworth, Ernest Bevin, A. Conley, Charles Dukes, J. L. Smyth and H. V. Tewson; on the government side were Sir John Simon, Walter Elliot, Sir John Colville (now Secretary of State for Scotland), Sir George Epps (Government Actuary), Edgar Hackforth (Ministry of Health) and the ever-present Frank Tribe. The TUC's position was that they would only support an increase in employee's and employer's contributions if the pension was raised to at least 15s Od per week (this lower figure was in deference to wartime conditions), if the wife of a pensioner became eligible at 55 (or possibly 60), and if retirement from industry was the condition under which any increase was paid. The veiled threat was that anything less would impel the TUC to instruct their members not to pay the higher contributions. As usual, Bevin did most of the talking. He wanted a retirement condition applied to the whole pension, but for the moment it would have to apply only to the 5s Od increase. The more radical change would have to take place, said Bevin, as part of a 'Consolidating Act' rationalising all the social insurance schemes. 'I doubt whether you could do it during a war unless you had a spare Haldane', said Bevin. (Soon that 'spare Haldane' was to be found in Sir William Beveridge.) The usual robust Bevinite arguments were put forward, such as the point that those workers who were least able to save for their old age were precisely those 'on whom the wealth of the country really depends'.35 On 23 November it was the other side's turn. The National Confederation of Employers' Organisations was represented by Sir John Forbes Watson (director), H. F. Brand (vice president) and Basil Sanderson (the previous year's president, and president of the Shipping Federation) . Essentially, the employers were opposed to a raising of contributions, especially now that war conditions had thrown Britain's exporting industries (always seen as the key to economic prosperity) into chaos. They also grumbled about the rising cost of all Britain's social services: clearly, they viewed with concern the development, in the inter-war years, of the expectation that the state should fix all benefits at some kind of subsistence level. As Forbes Watson put it, looking back to the 1911 National Insurance Act, 'unemployment insurance began with 7s Od to pay the rent and finished up with maintenance'. In other words, what had begun as a supplement to a breadwinner's savings had become a national minimum. What was interesting about this meeting was not what the employers said about pensions - they in fact said very little - but what they said 35

Memo, 'Old Age Pensions — Rates of Contribution. Meeting with Representatives of the Trades Union Congress', 15 November 1939, PRO T 161/994 (S.45029/4).

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about all the social services, for their comments pointed uncannily to the Beveridge Report only three years away. A major complaint by them was that because the social services had grown up piecemeal, the different benefits were fixed at different levels. A rise in one thus led to demands that the others should be raised - and so the process continued. (Such concerns had also been voiced within the Treasury in the late 1930s.) Basil Sanderson put it forcefully: What has happened in the last twenty years, looking at itfromour point of view? An attack is made on one [benefit]. That is taken individually. Then comes along a request for a material increase in another and so on. I feel very strongly about this myself. I do not know whether there is ever a chance of the system of social services being dealt with as one. Walter Elliot agreed that this was a strong argument for a coordination exercise, but warned that if all benefits were brought into line (making it thereafter easier to hold them there), most of them would have to rise in value. In 1925 the Conservative government had 'battered through' political controversy and held the pension down to 10s Od, 'and I do not think we can batter through any longer', said Elliot. Simon agreed: 'We shall not get through this without making some changes', he mused. But he suggested to the employers that the changes he envisaged would merely be the introduction of a new supplementation scheme run by the UAB and targeting the poorest pensioners.36 Simon, Elliot and their civil servants did not actively conspire to create the disagreement between the TUC and the employers; but it is clear that it was not unwelcome to them. In the economically uncertain conditions of wartime, a supplementation scheme could be quickly introduced. Any across-the-board pension increase could wait until maximum political advantage could be gained from it: 'Might it not be wise to keep any general improvement in the scheme as an item to be put before the electorate at the next general election?', was Tribe's everhelpful political advice.37 There were considerable administrative problems in effecting a radical change in the basic pension, such as the fact that the Pensions Division of the Ministry of Health was due to be evacuated from West London to Blackpool in early 1940. The difficulties of implementing a retirement condition would be greatly exacerbated by the volatility of the wartime labour market. To meet the TUC's demands (even with the employers' agreement), contributions for new entrants aged 16 would have to be raised from 1 Id to Is 6d (men) and 36

37

M e m o , 'Notes of a Deputation Received by the Chancellor of the Exchequer from the National Confederation of Employers' Organisations on Thursday 23rd N o v e m b e r 1939', ibid. M e m o by Tribe, 'Old Age Pensions', 11 Jan. 1940, P R O T 161/995 ( S . 4 5 0 2 9 / 6 ) .

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1

from 5 /2d to Is 3d (women). Even these increases did not represent the full actuarial value required to meet the pension needs of older entrants. If this were taken into account, contributions would have to be 2s Od (men) and Is 6d (women). The Treasury subvention to contributory pensions would have to be raised. In addition, the pensions of the 570,000 'means' pensioners receiving non-contributory pensions would also have to be raised to 15s Od. There would be relatively little saving through the retirement condition. Tribe dismissed the TUC's suggestion as 'hardly within the realm of practical politics' - a view he had taken all along.38 By December 1939, therefore, the Treasury had decided on its policy. A long and detailed report on the whole problem had been composed by Sir George Epps, the Government Actuary, and sent to both the TUC and the employers. Replete with gloom on the costings, and uttering dire warnings about an ageing population, Epps's report was the prelude to the Treasury's decision that the only improvements tolerable were a new central government supplementation scheme offering additional payments of no more than 5s Od per week per pensioner, on a needs basis assessed by a household means test, plus a lowering of the eligibility age for wives of pensioners to 60 - this latter to be funded by raising men's contributions by 3d in total (Id from employer and 2d from employee) and women's by 2d (Id from each party). Given that the average amount that pensioners had been receiving in PAC supplementation had been 8s Od per week, the proposed new scheme was exceedingly mean. On the justification that no agreement had proved possible between the TUC and the employers, the scheme might - in the exceptional circumstance of wartime, and straining backbench loyalty to the full - be just enough to defuse the political crisis over old age pensions. There was some further ritualistic consultation with the TUC and the employers during January 1940, but the Treasury's position had been established. The employers were quickly won over to the idea of the new supplementation scheme; the TUC remained obdurate that only an across-the-board increase would do.39 The only last-minute change in the scheme, before it went to the cabinet, was that all women were granted the lowered eligibility age of 60. It was thought to be impossible to confine the lowered age to wives of pensioners. A larger concession would also see off the challenge of the spinsters. 38

39

M e m o by Tribe, 'Old Age Pensions. Present Stage of Ministerial Inquiry', 5 D e c . 1939, P R O T 161/995 ( S . 4 5 0 2 9 / 5 ) . M e m o by British Employers' Confederation, 'Old Age Pensions', 5 Jan. 1940, P R O T 161/995 ( S . 4 5 0 2 9 / 6 ) .

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This double-pronged reform was a slightly more generous version of the 'acceptable' strategies that had been under consideration by the Treasury since 1935 as a way of heading off demands for an across-theboard increase. Thus when introducing the proposals to the war cabinet on 16 January 1940, the Chancellor, Sir John Simon, spoke of the strong pressure from within parliament and from the TUC, and said that the proposals were 'in lieu of a scheme for a flat-rate increase' in all pensions. Much relieved, the cabinet 'gave a warm approval in principle' to the scheme.40 On 23 January 1940 the Old Age and Widows' Pensions Bill was introduced into the Commons by Simon. It was, he stressed, 'the government's own scheme' - implying that neither the TUC nor the employers had been heeded. Simon argued that, in view of wartime conditions, it was essential to concentrate on those pensioners with little in the way of economic resources: hence a flat-rate increase was impossible.41 On 20 and 21 February, the bill received its second reading, producing quite a stormy debate. Still in opposition, Labour supported Part I of the bill (the lowering of the pensionable age for all women to 60), but voiced strong objection to way that Part II introduced meanstested supplements instead of an across-the-board increase in the basic pension. In the course of the debate, George Hall introduced an amendment calling for an overall improvement in the pensions of all those 'who have retired from work', and protesting at the household means test ('repugnant to the pensions system, odious in its administration').42 Labour conducted a strong attack on the means-testing proposals during the money resolution stage, but the bill passed unscathed. Part I of the 1940 Act in effect amended the 1925 Act so that insured women and wives of pensioners aged 60 and over could henceforth qualify for contributory pensions. A total of approximately 310,000 women benefited from this change: 140,000 previously uninsured wives of existing pensioners, 20,000 insured wives of pensioners, and 150,000 spinsters and other insured women. There was some dissatisfaction over it (notably that women of 60 and over who claimed such a pension and continued working became ineligible for National Health Insurance). Nevertheless, this was a dramatic precedent-establishing move, which fixed women's pensionable age at a point from which it could henceforth not be moved. Short-term political expediency produced an innovation that was to have major implications for pension funding in the future. 40 41 42

War Cabinet 15(40): Minutes of 16 Jan. 1940, PRO CAB 65/5. HofCDeb., 5s, vol. CCCLVI, 23 Jan. 1940, cols. 3 7 2 - 8 0 . HofCDeb., 5s, vol. CCCLVII, 20 Feb. 1940, cols. 1193-1309; and 21 Feb. 1940, cols. 1393-1498.

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Under Part II of the Act, pensioners could henceforth apply to the Assistance Board for supplementary allowances if they could prove that they were in need. As the National Federation of Old Age Pensions Associations had feared, the Treasury enquiry had resulted in a minimum-possible policy response, which merely extended the hated means-test procedures hitherto offered by the Public Assistance Committees to the very poorest pensioners. But the Treasury's policy backfired. In introducing the proposals to his cabinet colleagues, Simon repeated the Treasury's platitudinous assurances of the late 1930s on pensioner prosperity. He said: It is difficult to believe that there are still any very large numbers of old age pensioners who prefer destitution to the alleged indignity of applying for public assistance. Inquiries I have made show that, while much is made by our opponents in the House of the stigma of public assistance, the great majority of industrial workers do not feel very strongly on this point.43 Predictions of the likely take-up varied somewhat: Frank Tribe had envisaged a figure of around 750,000 (25 per cent of pensioners in 1939), but it was the prediction by George Reid, of the Assistance Board, that became the official one - 400,000.44 Yet when the scheme was introduced, 1,275,000 applications were received in the two months after the date of commencement of the scheme (10 June 1940) - a figure which shocked political and public opinion, and caused The Times to utter its famous comment about the 'remarkable discovery of secret need' that had been made.45 The number of pensioners who at any one time actually received supplementation rose from 1,380,000 in 1941 to 1,470,000 in 1945; by that latter year, the scheme was costing the Treasury nearly £60,000,000 - a far cry from the £5,250,000 that supplementation had cost before the Act, andfivetimes the amount that Frank Tribe had predicted would be the upper limit of expenditure. The 1940 Act had required the Board to conduct its administration 'in such manner as may best promote the welfare of pensioners', and for the remainder of the war the Assistance Board took an increasing interest in the poverty of old people, carrying out several important surveys into their financial circumstances.46 This step undoubtedly brought despe43 44

45

46

Quoted in R. M . Titmuss, Problems of Social Policy (1950), p. 516. M e m o by Tribe, 'Old Age Pensions' (Nov. 1939), P R O T 161/995 (S.45029/4); 'Supplementation of Old Age Pensions. N o t e by M r . Reid' (Jan. 1940), P R O T 161/ 995 (S.45029/6). Alan Deacon and Jonathan Bradshaw, Reserved for the Poor: The Means Test in Modern British Social Policy (1986), pp. 3 7 - 9 ; Alan Deacon, 'Thank You, God, for the MeansTest M a n ' , New Society, 25 June 1981, pp. 5 1 9 - 2 0 . For an account of this 'welfare' work, see Report of the Assistance Board for 1944, C m d . 6700, 1945, pp. 8 - 1 4 , 3 0 - 1 .

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rately needed financial relief to many old people in poverty. But we must note that there was established a precedent that was to dog the question of state pensions after the war: that the easier and cheaper alternative to an overall rise in pensions was supplementation by assistance. It is one of the many oddities of pensions history that the 1940 Act was to be such an important foundation of post-war pensions policy yet it was introduced as a short-term, expedient holding operation. All sides involved claimed victory. As we have seen, Sir John Simon thought that he had headed off the pensions challenge for the immediate future, although it was becoming increasingly obvious that a general enquiry into the whole panoply of income maintenance services would have to be undertaken. Pension campaigners within the Labour Party, the National Spinsters' Pensions Association and the National Federation of Old Age Pensions Associations believed that they had achieved something, even if the introduction of means-tested allowances was anathema to them. Senior civil servants took a rather more Olympian view, maintaining that they had outwitted their opponents and that the content and timing of the Act had been entirely determined by them. Retrospectively, one of them commented: 'The Spinsters' Pensions Association have always regarded Part II [sic] of the 1940 Act as a victory won on behalf of women generally. They have never been told, and would not believe it if they were told, that the determining factor was not the spinster.'47 Social disruption, 1939-1942 It is clear, therefore, that the rising tide of pensioner militancy was the principal reason why old age poverty reappeared on the political agenda in 1939-40. But there was also at work a second, and somewhat contradictory impulse, which enormously boosted the pensioners' cause. At the start of the war, a variety of severe social disruptions brought great hardship to the more vulnerable of the elderly population, and brought their plight to the attention of social work and voluntary organisations. On 1 September, just before the outbreak of war, there was implemented the government evacuation plan, whereby - over the course of several days - certain 'priority classes' in the civilian population were dispersed to safe reception areas in the countryside. These were school children, mothers with pre-school children, the blind, the disabled and the elderly; the disruption to their lives was considerable.48 47

48

N o t e by R. Hamilton Farrell, 'The 1940 Contributory Pensions Act Bill', 26 Feb. 1 9 4 4 , P R O P I N 8/48. Farrell confuses Parts I and II. Travis Crosby, The Impact of Civilian Evacuation in the Second World War ( 1 9 8 6 ) ; J o h n

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Even more traumatic were the effects of the implementation of the wartime Emergency Medical Service. Hospital wards were closed in inner-city danger areas and, at the same time, additional bed space was created in safe evacuation areas, partly by the construction of additional wards (for example, in prefabricated huts) and partly by the eviction of 'non-urgent' cases from existing beds. In total, 140,000 patients were discharged from hospital. Many of these were infectious, very ill or distressed. They were decanted to their own homes, from where they had to try and find beds in other hospitals, or simply fend for themselves. We know surprisingly little of what happened to these social casualties of the phoney war. It is likely that there were many elderly among them, and that the traumatic experience led to premature deaths. Another problem for pensioners was that in the early months of the war, high inflation further eroded the value of the pension: thus between September 1939 and March 1940 retail prices rose 15 per cent, and The Pensioner claimed that food prices - a high proportion of a pensioner's expenditure - rose by nearly 40 per cent. Again, from September 1940 old people had to contend with the nocturnal terrors of the blitz. Many had refused to be evacuated, or (like other classes of evacuees) had wandered back to the inner-city danger areas. There they had to endure bombing, blackouts and human confusion. The hazards of the blackout were reflected in the fact that old people had higher rates of accidental death and civilian injuries than the non-old. Extended family life was disrupted, communities were thrown into chaos and all those social contacts that provided them with landmarks of familiarity were abruptly altered. Many old people sought refuge (and companionship) by becoming permanent residents of air-raid shelters. As the blitz intensified, more and more government intervention had to be organised (such as the establishment of an 'Evacuation of the Aged' Committee in November 1940). Wartime social triage was an uncomfortable reminder that old people possess little 'social capital' value. For example, there was official concern that they might be 'clogging up' air-raid shelters and thus endangering the safety of others. As Richard Titmuss observed, in wartime the needs of the young took priority over those of the old.49 Renewed pensioner militancy The partial concessions in the 1940 Act were viewed with deep suspicion by the National Federation of Old Age Pensions Associations. 49

Macnicol, 'The Evacuation of Schoolchildren', in Harold Smith (ed.), War and Social Change (1986), pp. 3-31. Titmuss, Problems, pp. 334, 500, 559.

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But, at the same time, the events of the early war years infused the pensioners' movement with renewed confidence. The new scales for supplementary pensions - 9s 6d (single) and 12s Od (couple) - meant that there had been official agreement that 19s 6d was the lowest amount a single pensioner should live on, thus justifying the Federation's demand for pensions of £1 per week. The 1940 Act was a sign that pensioners had marched 'at least, half way to victory', but much more campaigning was needed to sweep away the means test. Interestingly, The Pensioner began by being highly suspicious of the role of Assistance Board officials ('the Means Test Leopard cannot change his spots', it warned), but eventually - after the household means test was virtually abolished under the 1941 Determination of Needs Act - there was grudging acknowledgement that pensioners were being treated better than other Assistance Board claimants.50 However, The Pensioner feared - correctly - that means-tested supplements were designed to weaken the case for universal pensions of £1 per week (which demand the Federation raised to 30s Od per week at its 1941 conference). By late 1942, the Assistance Board supplements brought the total amount pensioners could receive up to 22s Od (single) and 36s Od (couple), and their existence was being used by government ministers to argue that little more needed to be done. The Federation kept up its campaign to abolish the household means test, highlighting what it saw as humiliating and petty enquiries into pensioners' domestic circumstances. It viewed the relaxations of means-testing in December 1940 as a partial victory. Brimming with confidence, the Federation expected that the changed political atmosphere of wartime would bring it complete victory. What it did not realise was that the establishment of the Beveridge Committee in May 1941 marked the final stage of its marginalisation. The effect of the war on the pensioners' cause was thus highly contradictory: the general welling-up of reformist demands in 1940-2 helped them, but simultaneously other factors were weakening their position. Boosting their case was the fact that the enormous cost of the war seemed to expose the fiscal caution of the 1930s as sheer deceit. 'The war has taught us that the question "where the money is to come from" need not deter us', declared The Pensioner, pointing out that, in its second year, the war was costing £9,000,000 a day. Every three days, the nation was now spending on war what Sir John Simon had said would bring financial 'ruin' if spent on old age pensions in a year.51 In the House of Commons, one MP pointed out that, out of every £1 of 50 51

The Pensioner, June 1940 and April 1942. The Pensioner, March 1941 and Sept. 1 9 4 1 .

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public expenditure in 1940, 11s Id was required for war purposes, and only Is 6d for pensions of all kinds.52 However, such arguments now found less and less favour with those Labour politicians who, after the change of government in May 1940, found themselves ministers in the Churchill coalition, and were thus duty-bound to support the official line. This is an aspect of the political history of the Second World War that has been little remarked upon by historians,53 and was not fully appreciated by the National Federation at the time: the process of incorporation removed a major body of support for pensioners in parliament, and left only a small and disaffected group of left-wing Labour backbenchers to argue their case. Participation in the coalition thus intensified the conflict between the 'loyalists' and the 'dissenters' in the Parliamentary Labour Party.54 Clement Attlee, the Labour leader, had thrown his weight behind the parliamentary campaign for improved pensions in 1939-40; but, once in office, Attlee's interest rapidly cooled. Threatened by the whips' office, most Labour backbenchers toed the party line. The crumbling of this Commons support was painfully evident each time there occurred a division on a relevant issue. Increasingly, the National Federation could only count on the support of the small nucleus of left-wing MPs who were critical of Churchill's leadership throughout the war, and were thus politically marginalised - including J. J. Tinker, Aneurin Bevan, J. J. Davidson, S. O. Davies, Willie Gallagher, George Hall, James Maxton, D. N. Pritt, Manny Shinwell, Sidney Silverman and George Strauss. Indeed, old age pensions was one of the issues upon which Bevan and his band of parliamentary rebels voted against the wartime coalition.55 Indicative of this back-pedalling by the Labour establishment was the pamphlet, Labour's Fight for the Old Folks (1942), which gave an account of the party's campaign over the previous twenty years: the pamphlet's rather self-congratulatory tone petered out after the story reached 1940. 56 Throughout 1942, Labour's left-wingers tried to keep up the pressure: for example, R. W. Sorensen moved a resolution at the party's 1942 Annual Conference, and in parliament Tinker and others kept demanding a raising of the basic pension. 57 It is evident that the rebels' refusal to toe the government line on pensions caused some ructions 52 53

54 55 56 57

H of CDeb.35s3 vol. C C C L I I , 1 Nov. 1 9 3 9 , col. 2 0 2 7 . A notable exception is Stephen Brooke, Labour's War. The Labour Party During the Second World War ( 1 9 9 2 ) , ch. 3 . Ibid., p. 57. John Campbell, Nye Bevan and the Mirage of British Socialism ( 1 9 8 7 ) , p. 127. Labour Party, Labour's Fight for the Old Folks ( 1 9 4 2 ) . Report of the Labour Party Annual Conference, 1942, pp. 1 3 7 - 8 .

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within the Parliamentary Labour Party, and now caused the party's leadership considerable discomfort.58 In response to this parliamentary pressure, Sir Kingsley Wood (the new Chancellor of the Exchequer) merely raised the scales of Assistance Board supplements, and argued that nothing could be done until the Beveridge Report had been published.59 It is clear that the appointment of the Beveridge Committee, with post-war reconstruction as its remit, very effectively insulated the wartime government from pressure for social policy improvements. The significance of Labour's change of position was to become very evident once the Beveridge Report was published. As will be shown, the saga of the Beveridge Report also revealed how the policy machine successfully outmanoeuvred the National Federation and banished it into political oblivion. 58

59

Brooke, Labour's War, pp. 7 7 - 9 ; Kevin Jefferys (ed.), Labour and the Wartime From the Diary ofJames ChuterEde, 1941-1945 ( 1 9 8 7 ) , pp. 7 0 , 7 3 , 8 6 - 9 1 . HofCDeb., 5s, vol. C C C X C I , 16 July 1 9 4 2 , cols. 1 3 3 6 - 9 .

Coalition.

15

The origins and working of the Beveridge Committee

In June 1941, the Inter-Departmental Committee on Social Insurance and Allied Services under the chairmanship of Sir William Beveridge was appointed. This Committee originated in the general plans for postwar reconstruction that had begun in early 1941, at almost the lowest point in the war, under the overall direction of the same Arthur Greenwood who had led Labour's onslaught on the Chamberlain government over the pensions issue in 1939. The Beveridge Committee's initial purpose was to take over the work of a committee on the reform of workmen's compensation and health insurance, orginally chaired by Sir Hector Hetherington: this committee had been set up in 1938, at the TUC's insistence, but its work had been suspended in July 1940. During the war, the TUC had kept up pressure for a re-activation of the Hetherington Committee. In February 1941, the TUC General Council sent a deputation to Malcolm MacDonald, Minister of Health, requesting a reform of health insurance, and only accepted a slight expansion of health insurance in 1941 (a raising of the income limit for eligibility) on condition that a proper enquiry into it be set up. Significantly, the announcement on 22 May 1941 of a committee to review social insurance was made in tandem with one concerning the new Health Insurance Bill.1 Within the cabinet, Ernest Bevin - from his new position as Minister of Labour - continued to press for a reform of workmen's compensation. Thus in April 1941 discussions were held on the appointment of an inter-departmental committee of civil servants primarily to investigate both these areas of social policy.2 As in so many other social policy developments, pressure from the organised labour movement was crucial in shaping events. The crisis over pensions that had been rapidly building up since the mid-1930s was now to be resolved. The original intention had been to keep the enquiry low-key. Churchill initially wanted it 'to obtain a body of practical proposals 1 2

HofC Deb., 5s, vol. CCCLXXI, 22 May 1941, col. 1575. Memoranda, etc., in PRO PIN 8/85. 347

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which will command broadly the support of the main elements in all the political parties'.3 Either this was remarkably naive (in that such a consensual outcome would have been impossible), or it was a piece of political cunning (in that the exercise would have done enough to lift public morale, but would eventually have produced anodyne proposals). The committee was made up of only middle-ranking civil servants, and its terms of reference were carefully designed to be 'as harmless as they can be made', according to Bernard Gilbert of the Treasury.4 Even the House of Commons statement of 22 May 1941 by Ernest Brown, Minister of Health, making the initial announcement of the committee's appointment, was altered by the Treasury so that it referred to an 'overhaul' of'existing' services, rather than a 'reform' of them. 5 The Beveridge Report now tends to be viewed as less of a dramatic and revolutionary welfare blueprint, and more of a rationalisation of existing services, co-ordinating all the moderate reformist ideas that had built up in the 1930s. This is not in any way to detract from Beveridge's own personal contribution as the Report's author: indeed, it is to magnify it, for undoubtedly one factor in the Report's apparently revolutionary nature - apart from the peculiar political climate in which it was published - was Beveridge's genius as a co-ordinator of official investigations. From experience of serving on innumerable public bodies (notably, his membership of the 1925-6 Samuel Commission on the Coal Industry and his chairmanship of the Unemployment Insurance Statutory Committee from 1934), Beveridge had accumulated formidable skills in the art of government committee work. The historian who reads through all the complicated proceedings of the Beveridge Committee cannot fail to be enormously impressed by the magnificent intellect of its chairman. But Beveridge was also giving eloquent, individual expression to a growing tide of liberal-reformist opinion. By the end of the 1930s, every thoughtful observer of social policy in Britain realised that a co-ordination of social insurance was badly needed. Just on the eve of the war, this had blown up into a major political issue, impelled by the pensions agitation. Pressure was building up in the House of Commons for some sort of social security reorganisation, possibly conducted by a Royal Commission. For example, on 22 February 1939 the pensions campaigner George Hall introduced a motion into the Commons on the 3

4 5

Memo by Churchill, 'Study of Post-War Problems', 30 Dec. 1940, PRO PREM 4 (88/1). Gilbert to Barlow, 7 June 1941, PRO T 161/1164 (S.48497/1). Memoranda in ibid.

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need to reorganise all the social insurance services.6 In November 1939 the Liberal Graham White - one of the leading 'middle way' advocates in parliament - called for one governmental body to co-ordinate social insurance and reduce overlapping. In the same debate, the Conservative MP Hamilton Kerr expressed the prevailing view in an exotic metaphor reassuringly familiar to those on his backbenches: the British social services, said Kerr, resemble one of those great country houses of England to which each generation has made a contribution; they are beautiful to look at, but often uneconomic to run, for the kitchen is many yards away from the dining-room . . . I believe that now is the time to have a reconnaissance over the whole field of the social services, and to ask ourselves, firstly, whether we are getting sufficient return for the great sums we are spending and, secondly, whether we could, by more effective administration, give greater benefits.7

Again, on January 1941 - when the Beveridge Committee was no more than a twinkle in Arthur Greenwood's eye - the journal Picture Post published an edition on the need for a new Britain, rid of its pre-war social problems, such as unemployment. Included in it was an article on social security by A. D. K. Owen, that stalwart of Political and Economic Planning in the 1930s, which contained many of the middle opinion nostrums soon to be recommended by Beveridge: Owen called for 'a drastic overhaul of the British social security services', which were 'full of gaps and deficiencies'. The basis of the new plan should be a national minimum, 'below which no one should be allowed to fall, in employment or out, in sickness or in health, during widowhood or in old age'. There would be a minimum wage for able-bodied adults, with children's allowances, a comprehensive call-in' social security system based on contributory insurance, and a residual assistance back-up - all run by a new Ministry of Social Welfare.8 Finally, we should note that the Labour Party had drawn up its own plan for a universal and comprehensive social insurance scheme in late 1941 and early 1942, producing an internal policy document, A Scheme for Social Insurance in February 1942. 9 Given this apparently consensual pathway, many historians have viewed the Beveridge Committee's appointment as indicative of the rapid spread of radical ideas within government which overtook more conservative elements. To an extent this is true, and Paul Addison's 6 7 8 9

HofCDeb., 5s, vol. CCCXLIV, 22 Feb. 1939, cols. 395-460. Ibid., vol. CCCUI, 1 Nov. 1939, cols. 1979-80, 1985. Picture Post, 4 January 1941. Stephen Brooke, Labour's War. The Labour Party and the Second World War (1992), pp. 155-60.

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metaphor of a tide of liberal reformism inexorably sweeping through Whitehall after May 1940 is a compelling one.10 But the Beveridge Committee was viewed in very different ways by people of different political positions: at one end of the spectrum, radicals saw it as an opportunity to establish a long-sought national minimum; at the other, conservatives believed that there could be economies of administration, and - through the insurance principle - a holding-down of benefits once they had all been brought into line. Certainly, it is clear that the appointment of the Committee, specifically charged with post-war reconstruction, ensured that many of the radical reformist ideas of the early war years were put on ice. Organisations invited to give evidence to the Beveridge Committee were specifically instructed to confine themselves to suggestions for post-war policies, and Beveridge's recommendations were so geared. To an extent, this was logical, given the peculiar disruptions of wartime; but it was also a recipe for delay in controversial and potentially expensive policy proposals. Many issues discussed by the Beveridge Committee were effectively defused by these terms of reference. Thus in announcing the Committee's establishment in parliament Ernest Brown pointedly stated that its recommendations could only be part of 'post-war planning'.11 Early on in the Report, Beveridge declared that the exact level of benefits in his new scheme would have to be related to post-war conditions, and it was 'impossible today to forecast with assurance the level of prices after the war'.12 In the case of pensions, it is very clear that the Beveridge Committee's appointment was the last and most effective in a series of holding operations that were carried out from the mid-1950s onwards - the Le Quesne Committee, the Treasury enquiry, the 1940 Act, the 1941 Act, the Assistance Board investigations - to buy time and weaken the demand for an across-the-board increase in pensions. The remarkable success of this defensive strategy can be seen by the fact that throughout the war - indeed, between 1919 and 1946 there was no increase in the basic pension, despite repeated calls from pension campaigners that it be raised. Ostensibly, the Beveridge Committee was appointed to sort out the tangled mess of income maintenance policies which had grown up piecemeal over several decades.13 When these were finally reorganised by the 1946 National Insurance Act, it took three pages of print to outline the schedules to the Act that completely superseded previous 10 11 12 13

Paul Addison, The Road to 1945 (1975), p. 126. HojrC Deb., 5s, vol. CCCLXXI, 22 May 1941, col. 1575. Social Insurance and Allied Services, Cmd. 6404, 1942, p. 14. Jose Harris, William Beveridge, a Biography (1977), pp. 378-9.

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Acts of Parliament, and a further nine pages to outline the amendments to previous Acts. 'The system has grown up in a haphazard, piecemeal way, much like a patchwork quilt', said James Griffiths, Minister of National Insurance in the 1945 Labour government.14 Old age pensions were a classic example of this administrative confusion and overlapping. The 1908 non-contributory scheme was administered by the Customs and Excise Office and paid through the Post Office; the 1925 contributory pensions scheme was administered by the Ministry of Health through the National Health Insurance system; some 250,000 of the poorest pensioners (roughly 10 per cent) had received assistance from the Public Assistance Authorities in the late 1930s, and when supplementary pensions replaced this system in 1940, they were then paid by the Assistance Board. The last two supplementation schemes depended upon a means-testing procedure quite different from that of the 1908 scheme. As the Fabian William Robson commented wearily in 1943, 'it is all incredibly and senselessly complicated'.15 However, it is political naivety to imply - as Robson was implying that this bewildering complexity was the result of a chapter of accidents. Instead, it reflected the fierce political controversies that accompanied the evolution of old age pensions. As this study has shown, the various additions grafted on to the 1908 scheme were designed to circumvent pressure for universal, tax-funded pensions at the age of 60 at a level of 'adequacy', and thus to contain the cost of pension funding at an amount that was regarded as acceptable. Historical counterfactuals can be risky, but it is clear that, had the 1908 scheme been steadily improved over the years, no Beveridge investigation would have been needed. Political pressure would have produced pensions of around £1 per week by the late 1930s with a measure of means-testing to ensure that they were highly redistributive at great cost to the tax-paying classes. Cutting the Gordian knot of administrative confusion was important, but it had to be done in such a way as to render the pension scheme invulnerable to popular pressure. Viewed in the context of pensions history, therefore, the appointment of the Beveridge Committee was both an opportunity for radical reform and another chapter in the Treasury's long campaign to contain the cost of pensions. The radical potential was not lost on the National Federation of Old Age Pensions Associations, who gleefully viewed the whole exercise as a concession to working-class pressure. The Pensioner declared that the Beveridge Committee was set up 'as a result of the 14 15

Hof CDeb., 5&, vol. CDXVIII, 6 Feb. 1946, col. 1735. W. A. Robson, 'Introduction: Present Principles', in W. A. Robson (ed.), Social Security (1943), p. 15.

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pressure by the National Federation . . . upon individual MPs', and commented: 'Whenever the government gets itself into a fix upon an issue, finding itself completely out of touch, not only with those in opposition to it, but also with its own supporters, then it appoints a Committee.' However, there was a note of unease: The Pensioner complained that the National Federation's request to have a representative on the Beveridge Committee had been denied by Arthur Greenwood, on the grounds that it was an inter-departmental committee of civil servants. Permission to submit evidence was granted only after 'prolonged correspondence'. There was some justified suspicion that the Federation was being sidelined from the policy process, and on 1 June 1942 H. W. Tyrell (its general secretary) wrote to every MP, complaining that the immediate needs of pensioners were being deliberately excluded from the committee's remit.16 Nevertheless, in the runup to publication of the Report, the National Federation was optimistic that its pension demands would be part of the Report's recommendations. Federation leaders gave oral evidence to the Beveridge Committee with a noticeable air of confidence.17 It is clear that, besides the National Federation, other old age pressure groups had high expectations that the Beveridge Committee's appointment would be an opportunity to instigate a wide-ranging review of all the proliferating needs of old people that had been revealed in wartime, for they submitted memoranda to that effect. For example, the National Council of Social Service raised the common complaints on pension anomalies (particularly, the British nationality and/or residence stipulation, the problems of those who had inadequate insurance contribution records, and the means test). But it also saw problems such as better medical and nursing services, the provision of institutional care, and isolation and loneliness, as equally important.18 However, Beveridge paid scant attention to these broader issues. With typical single-mindedness he interpreted his terms of reference as covering only the question of pension funding. On the face of it, his task was quite simple and essentially managerial: to amalgamate the 1908 and 1925 schemes, with one coherent administration; to make pensions part of a universal, contributory social insurance system; and to raise pension levels up to 'subsistence' so that there would be no need for supplementation by the Assistance Board, so that they would thereby harmonise with other benefits, and so that political pressure would be 16 17 18

The Pensioner, Nov. 1941, Jan. 1942, May 1942, July 1942. SIC(42) 1 lth Meeting, part 1, 20 May 1942, PRO CAB 87/77. National Council of Social Service, The Needs of the Aged (2 April 1942), PRO CAB 87/ 79.

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assuaged. But as he began to address these issues, he began to see that they were much more difficult than they appeared at first sight. On the pensions issue, Beveridge had been handed something of a poisoned chalice. The three issues in pensions reform Essentially, there were three key issues in pensions reform - universality, subsistence and retirement. On the face of it, they appeared to be somewhat dull, managerial and classically 'social administration' issues. But in fact they concealed vitally important controversies that had been discussed since 1908 and were long overdue for settlement. And all of these three issues interacted, creating a complex amalgam of problems that Beveridge found very difficult to resolve. The 'Beveridge pensions dilemma' can be summarised as follows. The new pension scheme had to be made universal in cover, in order to legitimate the insurance principle which would build a protective wall against 'irresponsible' demands for higher pensions. But there were two problems with universality. First, pensions would go to those who did not strictly need them. Seebohm Rowntree's 1936 survey of York had shown that poverty in old age was 'more acute than that due to any other single cause' (in that, of all categories in poverty, old people in poverty suffered the greatest shortfall of income below the poverty line), but that two-thirds of pensioners in York were above the poverty line. Exhibiting his unerring tendency to justify the political and economic status quo, Rowntree had found that the proportion of York pensioners in poverty was precisely the proportion that claimed Assistance Board supplements nationally in 1940: he thus argued that 'in view of the large number of old persons who are in poverty and also the demand so frequently made for more liberal state pensions', it was important to target only the poorest pensioners. This conclusion was gratefully deployed by Beveridge.19 Means-testing the pension would have targeted the very poorest, but means-testing was impossible in a scheme that paid pensions to all by contractual right, earned via insurance contributions. It would be very easy for critics to argue that it was not, therefore, a true insurance scheme and should be replaced by a tax-funded, highly redistributive one. If universal, and at subsistence level, pensions would be very expensive. The second problem with universality was therefore its 19

B. S. Rowntree, Poverty and Progress (1941), pp. 66-71; SIC(42)3: cThe Scale of Social Insurance Benefits and the Problem of Poverty', by Beveridge, 16 Jan. 1942, Beveridge Papers VIII 28.

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expense. This, as we shall see, was to loom larger and larger in Beveridge's thoughts until it became the dominant consideration. Universality was one of the key principles of the Beveridge Report, and the achievement of universal benefits was held up for decades thereafter as an important victory for egalitarianism - as if a slight change in the structure of benefits had radically altered the profound inequalities in British society. Egalitarianism was not, however, Beveridge's motive. Instead, the extension of pension rights to every citizen was the political sweetener that made possible an important victory for the Treasury in its long battle to alter the basis of pension funding and thus contain the redistributive element in provision for old age. Universality legitimated the insurance principle, and the insurance principle legitimated inadequate pensions. The shift to universal pensions also marked the final demise of the gender-blind, 'citizenship' pension of 1908: henceforth married women would no longer receive pensions as of right, but by virtue of their husbands' contributions. Why, then, did pensions have to be at 'subsistence'? Subsistence was the second legitimating principle of the Beveridge plan, bringing practical and political advantages. In order to present the plan as egalitarian, its benefits had to harmonise with each other - flat-rate benefits for all. Justifying the pension level by the notionally scientific concept of minimum subsistence would also beat off the challenge of the pensioners' lobby. Subsistence would minimise the need for Assistance Board supplementation, thus strengthening the insurance principle: if it could be shown that social insurance was capable of delivering adequate pensions, then the political case for tax-funding would be held at bay. Finally, the apparent achievement of subsistence was essential in order to satisfy the political demands for a 'minimum nutritional income' for all that had grown in the 1930s. However, universal subsistence pensions would be so expensive as to be unfundable by the insurance principle. The level of flat-rate contributions required would be higher than the poorest could afford. There would have to be a considerable Treasury subvention; the danger would then be that this would end up so large as to make the insurance principle - always something of a fiction - a complete farce. For a different reason, there would then be demands that pensions be wholly funded out of taxation. It seemed that the principles of universality, insurance and subsistence were irreconcilable. The only answer would be somehow to construct a pension scheme that appeared to be universal in cover, contributory insurance in funding, and subsistence in amount - yet would somehow target the really needy. To complicate matters further, there was a third issue. The need for a

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retirement condition was pressed upon Beveridge by the TUC as a necessary corollary of granting subsistence pensions. If workers had to retire in order to claim the pension, then that pension had to be enough to live on; and a retirement condition was the only way to put an end to the practice of cutting the wages of older workers with pensions. A retirement condition could ease the situation in one way, by helping to contain costs: being a concealed means test, it would lower the numbers eligible. But a retirement condition carried dangers. It could be seen as contrary to the insurance principle. It could prove unpopular and impractical. And, paradoxically, it could result in escalating pension costs - by speeding up the rate of retirement in the future and by creating a situation where more and more pensioners were solely reliant upon the pension (thus fuelling the demand for higher pensions). Logically, if there was to be a retirement condition, then subsistence pensions were unavoidable. Whichever path Beveridge chose, an expensive pension scheme seemed unavoidable. Subsistence By 1942, all social commentators agreed that, in the changed political atmosphere of wartime, the political pressure for subsistence pensions had become irresistible: for example, Wilson and Mackay's classic study, published in 1941, recognised this.20 However, if the new pensions were to harmonise with the proposed levels of unemployment and sickness benefit - 24s Od per week (single) and 40s Od per week (married couple) - they would have to be more than doubled from the pre-war rate of 10s Od per week, and this would be enormously expensive. In the late 1930s, as we have seen, even small proposed additions to the pension scheme caused apoplexies within the Treasury. The question was, therefore: could the Beveridge Report's commitment to subsistence benefits be honoured in the case of pensions, given that pensioners were the largest single group of claimants and that the continued ageing of the British population would inexorably increase their fiscal demands? The subsistence principle was 'the heart and soul of the Beveridge Report', Beveridge later declared.21 It was 'the central idea', without which 'the Report would have been no more than a rationalisation of existing services'.22 Repeatedly, it was affirmed almost as an article of faith: in the new social security scheme, benefits would be universal, 20

21 22

Sir Arnold Wilson and G. S. Mackay, Old Age Pensions: An Historical and Critical ( 1 9 4 1 ) , p. 2 1 5 . Beveridge to Lord Amulree, 21 Jan. 1954, Beveridge Papers VII 6. Beveridge, in The Times, 9 Nov. 1953.

Study

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comprehensive and at subsistence level - which meant in conformity to prevailing Rowntree-level poverty lines. Contributory insurance had to be seen to deliver adequate benefits, and it was essential that all benefits harmonise with each other. The Nuffield College Social Reconstruction Survey reported to the Committee what every thoughtful observer knew: that 'there is practically unanimous agreement that the present amount of the old age pensions, even with the supplementary pension, is inadequate'.23 In Poverty and Progress (1941) Rowntree declared that: 'A pension of 10s Od a week is inadequate to enable either a man or a woman to live on, or anywhere near, the minimum standard if living alone, nor can a man and wife living together and each with a pension, do so.' He argued that the minimum amounts needed were 15s 3d for a man living alone, 12s 6d for a woman living alone and 22s 4d for a married couple, exclusive of rent. Adding even a modest rent allowance of 7s Od per week produced minimum pension levels of about £1 (single) and 35s Od (couple).24 Again, the granting of Assistance Board supplements on top of the basic pension made it possible for a single pensioner to receive a total of 22s Od per week by late 1942. These constraints appeared to have boxed Beveridge into a corner, whereby he would have had no option but to concede to the demand voiced by radical pension reformers before the war: a doubling of the basic pension to £1 per week at 1938 prices. Taking into account the 25 per cent rise in the cost of living, this would have represented 25s Od in 1942 - roughly in line with his other proposed benefits, and enough to dispense with Assistance Board supplements. Beveridge himself fully realised this. In early Committee discussions he assumed that the basic pension would be raised high enough for Assistance Board supplements to cease. In the famous 'Basic Problems of Social Security' memorandum of 17 December 1941, he minuted to his Committee that: A substantial increase of the present pension scales is necessary; this increase should be such as to make it possible to dispense with supplementary pensions under the Means Test. The scale of the supplementary pensions now being granted, combined with the rules limiting the means to be taken into account, sets a high standard of increase for contributory pensions.25 But could this 'high standard of increase' be afforded? Beveridge quickly began to have doubts. In the very same memorandum, he warned that 23

24 25

Quoted in John Veit Wilson, 'Beveridge and the Invisibility of Poverty', in Social Security 50 Years After Beveridge, vol. I (Papers of York University/STICERD Conference, 1 9 9 2 ) , p. 4 9 . Rowntree, Poverty and Progress, p. 7 0 . 'Basic Problems of Social Security with Heads of a Scheme. M e m o r a n d u m by the Chairman', 11 D e c e m b e r 1 9 4 1 , P R O C A B 8 7 / 7 6 .

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'the problem of old age pension scales is financially one of the most important in the scheme, owing to the prospective increase in the proportion of the population who will be of pensionable age'. Even raising pensions to 'the minimum that can be expected to make possible the suppression of most supplementary pensions' - 17s 6d for single men and women aged 65+, 15s Od for single women aged 60-64, and 30s Od for a couple - would raise the cost of pensions for those aged 60-70 by 40 per cent, and for those aged 70+ by 70 per cent.26 Beveridge thus faced a serious dilemma. In order to legitimate the shift to contributory funding, pensions had to be made universal and freed from any means tests; but universal subsistence-level pensions would be very expensive, and their cost would inexorably rise in the future as demographic trends increased the proportion of old people in the population. Increasingly, the over-riding consideration became the size of the burden that an improved pension scheme would place on the post-war economy. As his concerns deepened, Beveridge drew more and more on the demographic fears about the consequences of an ageing population. Though possessed of a sceptical, sharp intelligence that was usually able to see through intellectually slipshod arguments, Beveridge nevertheless accepted rather uncritically the mood of pessimism that ran through much of the demographic forecasting of the time. These arguments were to be used to full effect in the Report, clothed in language that was apocalyptic. Repeatedly, in alarmist phraseology, he warned of the catastrophic economic consequences that would follow if pensions were 'too generous', as when he declared at the committee's very first meeting: 'I am afraid that old age is going to be frightfully expensive; there are going to be a fearful lot of old people.'27 The logical solution was to abandon the subsistence principle in the case of old people, the largest single group of future claimants. But first he had to tackle the problem of whether or not to have a retirement condition. The retirement condition The retirement condition was discussed early in the Committee's consideration of pensions, but initially Beveridge was dismissive of it. At the Committee's first meeting, on 8 July 1941, memoranda were commissioned from relevant departments on outstanding problems in the existing social security system.28 The response was typically civil service: administrative anomalies were highlighted, especially those in 26 28

21 Ibid. SIC(42) 5th Meeting, 11 March 1942, PRO CAB 87/77. SIC(41) 1st Meeting, 8 July 1941, PRO CAB 87/76.

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the means-testing procedures.29 By December, Beveridge had constructed a skeletal outline of his proposals, which he circulated to his Committee members (the 'Basic Problems' memorandum). Interestingly, in this he clearly envisaged no retirement condition, declaring that in a reformed system, pensions would cbe paid on proof of age, without means test and without proof of disability or retirement from work'. At this point, he had no reservations about awarding a pension simply according to age. This, of course, was logically consistent with the principles of social insurance which Beveridge so admired: an insurance pension should have been paid by contractual right at a given age, in return for contributions paid by the individual. As we have seen, this had been the prevailing view within Whitehall in the 1930s, and had been used as a powerful argument against trade union demands for a retirement condition - most notably by Neville Chamberlain. However, Beveridge did include the possibility of a retirement condition in 'some principal questions' that organisations submitting evidence should consider.30 The issue suddenly came on to the agenda on 14 January 1942, when representatives of the TUC General Council gave oral evidence, and insisted that any improvement in the basic pension (which they strongly supported) would have to be accompanied by a retirement condition as they had forcefully argued throughout the 1930s.31 In part, the TUC's motive was the rather self-interested one that had shadowed trade union discussion of pensions over the previous twenty years: without a retirement condition, employers would impose wage cuts on their employees aged over 65 equivalent in amount to the level of the pension; a retirement condition would remove this cheap reserve army of labour that had the potential to undercut a trade union-negotiated rate for the job. Of course, legislation could have been introduced to make such cuts illegal: it could have been workable, though it probably would have resulted in more older employees being sacked. However, the TUC was firmly wedded to the Bevinite doctrine of free collective bargaining, unfettered by legislative interference in the wage contract, and thus never contemplated such a measure. Since the days of the ILP's 'living wage' proposals of the mid-1920s, TUC leaders had disliked any idea of state interference in wages, since this would erode 29

30

31

Memorandum by Commissioners of Customs and Excise, c Non-Contributory Old Age Pensions', 20 Aug. 1941, ibid. 'Basic Problems of Social Security'; Social Insurance and Allied Services. Memoranda from Organisations^ Cmd. 6405, 1942, p. 2. The delegation consisted of F. H. Wolstencroft (chairman of the TUC General Council) and eleven others, including Ellis Smith (a notable pensions campaigner).

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the shop-floor role of trade unions and might result in a hostile state holding down wages by legislative fiat. However, the TUC leaders also acted as forceful advocates of the pensioners' cause. For them, a retirement condition could only be introduced if the pension level was adequate. They thus insisted that the pension should be substantially raised - they argued that even £2 for a couple might be inadequate - and that it should represent the 'citizenship' pension long demanded by the labour movement. In a discussion of benefit rates, Beveridge suggested that pensioners' subsistence levels should be lower than those of working-age individuals. Two TUC representatives, Dr Hyacinth Morgan and J. L. Smyth, strongly disagreed: Morgan denied that a pensioner needed less to eat than a working-age adult. 'The fact that they are retired seems to be all the more reason why they should have money to enjoy life when they have the time', said Smyth. Old people in institutions cate jolly good meals, there is no doubt about that', affirmed another. In reply, Beveridge voiced several concerns. The future cost of pensions would put a 'burden' on the community far greater than anything hitherto experienced: he did not want to direct resources to pensioners 'at the cost of the children, at the cost of others'; the problem was to give fair treatment to the old 'without ruining the country'. It is clear that, from the very beginning, Beveridge realised that benefit levels would be decided not primarily by criteria of need or subsistence, but by dividing up between competing groups of claimants a fixed and 'acceptable' total sum of public expenditure. In this division of spoils, social capital arguments dictated that the retired would fare badly. Smyth was much less pessimistic, and responded with the argument that the TUC had used throughout the 1930s against such demographic determinism. He suggested that the answer could be found in improved productivity, and hence a larger tax base, via a properly planned economy. Almost casually, he added that unemployment could also be lowered by shrinking the labour force through the imposition of a retirement condition: 'We do not visualise that the people who would get the pensions would be continuing at work, so there ought not to be so much unemployment'. TUC leaders saw no unfairness in an imposed retirement condition, providing the pension was adequate. As one said, 'if the pension is big enough it is an equitable thing to do - if it is big enough'. Beveridge initially dismissed the idea completely, though he should have expected nothing else from the TUC. He rejected the view that there was a natural limit to the total level of employment at any one time, and doubted whether an exodus of older workers really would

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create fresh employment opportunities for the young. But in the face of TUC insistence that a retirement condition should be introduced (with a small income disregard), he promised to look into this 'new principle' and the practical problems raised by it. 32 Accordingly, he commissioned papers on the subject from relevant departments. The familiar arguments of the 1930s reappeared. P. Y. Blundun, the Ministry of Labour representative on the Committee, was rather pessimistic on the question of whether continuance at work could be made an offence, and whether public opinion would tolerate pensioners being prosecuted; but he recognised that the existing meanstesting procedures could be extended to do the job of ascertaining whether or not a pensioner was working. With the best kind of civil service scepticism, Blundun perceptively concluded that if the aim of a retirement condition was to reduce competition in the labour market and hence lower unemployment, it should target the small number of pensioners (perhaps only 10 per cent of them) who genuinely were industrial competitors with the young; this would be well-nigh impossible to achieve through legislation.33 This scrutiny of administrative problems was more than mere civil service nit-picking. As has been shown, the prevailing view in political circles in the 1930s was that a retirement condition would be very difficult, if not impossible, to enforce, as well as being a flagrant violation of the insurance contract. As recently as February 1940, two government spokesmen had dismissed Labour's proposed retirement condition as impractical: Walter Elliot (Minister of Health) had said that such a 'work test' was inoperable, and would be resented; and John Colville (Financial Secretary to the Treasury) had warned that it 'would lead to endless difficulties'.34 Pensioners enjoyed considerable public sympathy, and thus public opinion would not tolerate their being prosecuted for the 'offence' of working; an effective work test would be clumsy and expensive to operate, and a simpler declaration of unemployment (to be signed by the pensioner) might be open to fraud; if the aim were to liberate jobs, it would be very difficult to distinguish between income from formal employment and small earnings from a hobby; resentment might be felt by those who had paid contributions for fifty years and then were told that they could not claim a pension because they wished to continue working; pensioners might not understand the necessarily complex rules of entitlement; investigating officials would find it hard to 32 33

34

S I C ( 4 2 ) 1st Meeting, 14 Jan. 1 9 4 2 , P R O C A B 87/77. S I C ( 4 2 ) 3 1 : M e m o r a n d u m by P. Y. Blundun, 'Retirement Pensions: Practicability of Enforcing Conditions', 17 April 1 9 4 2 , P R O C A B 8 7 / 7 9 . HofCDeb., 5s, vol. CCCLVII, 2 0 Feb. 1 9 4 0 , cols. 1 2 1 5 , 1305.

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decide whether odd jobs for small amounts of cash in hand really constituted 'work'.35 However, a more positive argument came from Sir George Reid who, as the Assistance Board's representative, had first-hand, encyclopaedic knowledge of the means-testing procedures under the 1940 supplementary pensions scheme and took a rather more favourable view of the honesty of pensioners. Reid pointed out that only a minuscule proportion of supplementary pensioners found themselves periodically ineligible through having earned more than the permitted 5s Od per week earnings limit: in one week in November 1941, it was a mere 684 out of a total of some 1,100,000 claimants. Claimants of supplementary pensions were, of course, the very poorest pensioners, those least likely to have even occasional employment: the Board estimated that 90 per cent of them were never likely to work again, even in a full-employment war economy; and 68.3 per cent of them were women (in October 1944). 36 Regular investigations of individual claims (including home visits) had revealed a high level of honesty. Indeed, the Board had been able to cut down the frequency of such visits because of this. A declaration of earnings would suffice to enforce a retirement condition, Reid concluded; no further policing would be needed. It would be regarded as no more unusual than an income tax statement of earnings, or a declaration of unemployment when claiming unemployment benefit. Basically, pensioners could be trusted. Thus, although Reid believed a retirement condition to be 'open to strong objection in principle' (he declined to elaborate), it could be operationalised.37 These civil servants had unwittingly touched upon the crux of the whole retirement issue: if a work test would make no difference to labour force participation rates of older men, then what was the point of introducing one? The first point we should note is that the inordinate amount of time spent discussing the retirement condition was an indication of how masculinist the pensions discussion had become. As we shall see, in the Beveridge pension scheme the proportion of women to men pensioners was to rise to a ratio of 3:1. The real 'problem of age' was not the industrial behaviour of a relatively small number of male workers aged 65+ (including all forms of work, probably no more than 400,000 in the late 1930s, and steadily falling): it was an acute feminisation of poverty 35

36 37

M e m o r a n d u m by Blundun, 'Retirement Pensions'; M e m o r a n d u m by E. Hale, 'Retirement Pensions', 2 4 April 1 9 4 2 , P R O C A B 8 7 / 7 9 . Report of the Assistance Board for 1944, C m d . 6 7 0 0 , p. 2 3 . M e m o r a n d u m by Sir George Reid, 'Practicability of Enforcing a Retirement Condition. Supplementary Pensions Experience', 11 April 1 9 4 2 , P R O C A B 8 7 / 7 9 .

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in old age. Even more strange was the fact that the retirement condition was likely to make very little difference to the labour force participation of these older male workers, since it erroneously assumed that retirement was a product of consumer choice - what would now be called a 'supply-side' model. On the face of it, it would seem that the retirement condition was introduced because the labour movement succeeded in persuading Beveridge of the need to redistribute jobs to the young and simultaneously protect the wage structure. But, in one of the oddest paradoxes of social policy history, the intention behind this innovation was to become precisely the opposite of what previous advocates had suggested. Beveridge eventually argued that it would discourage retirement, and hence contain the cost of pensions. For the previous ten years, advocates of retirement pensions had been arguing that they would redistribute jobs to the young. Now Beveridge was arguing that a retirement condition would keep older workers in the labour market. Beveridge showed scant concern for the wage-reduction fears of trade unionists, or their belief that retirement pensions would lower unemployment. Nor did he share the pessimism of more conservative analysts of the 1930s who had argued that the drive for industrial efficiency required a faster removal of aged, 'worn-out' workers. On the contrary, he maintained that such evidence that existed on the health status and life expectancy of older workers supported the view that many of them were quite capable of remaining at work past the age of 65. 38 He recognised that surprisingly little longitudinal research had been conducted into the changing capacity for work of individual men and women over the age of 65. But from records of the Amalgamated Engineering Union and the Friendly Society of Iron Founders he concluded that, since the late nineteenth century, the age of voluntary superannuation had risen slightly, by between one and four years; but this had been more than offset by longer periods of retirement in each trade, placing a net strain on their superannuation funds. Given that they would be physically capable of staying on in employment, it would not be unreasonable to encourage workers to postpone retirement. Yet here Beveridge's reasoning was peculiar. He seems to have been anxious to disprove 'the popular impression that the growing pace of industry is rendering people unfit earlier and earlier in life'.39 However, from this he should have drawn a very different conclusion: if, over the previous fifty years, retirement had inexorably spread in spite of the 38 39

Social Insurance and Allied Services, para. 2 5 5 . M e m o r a n d u m by Beveridge, T e n s i o n s Finance', 16 July 1 9 4 2 , Beveridge Papers VIII 33.

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increased ability of men to work in old age, then it must have been caused by a long-run decline in the demand for the labour of older males, consequent upon industrial re-structuring. No amount of legislative inducement could create future jobs for older workers if such jobs were slowly and inevitably disappearing. As an incentive to postpone retirement, the retirement condition was utterly pointless. Indeed, in Appendix A to the Beveridge Report the Government Actuary, Sir George Epps, argued that it would probably increase the rate of retirement.40 To be sure, Beveridge was an economic optimist and believed that, with a more planned and prosperous economy after the war, the labour force could be expanded such as to mop up the unemployed and retain the labour of older workers. In fact, in his Report he quite frankly envisaged that older workers would form a convenient reserve army of labour: 'To make the age of retirement flexible is one way of adjusting supply of labour to fluctuations in demand. In times of good trade the older men will find it easier to keep their work and postpone retirement. In times of bad trade they will tend to retire earlier and reduce the supply of labour.'41 But his justification of the retirement condition was so paradoxical as to raise the suspicion that he in fact used it opportunistically. His public argument was that it would slow down the rate of retirement and thus contain pension costs which, he insisted, would become a serious fiscal burden in the future. However, the real attraction of the retirement condition was that it could be used to justify the payment of inadequate, below-subsistence pensions. In an ingenious piece of reasoning, the TUC's logic had been turned on its head. For whereas the labour movement had always insisted that a retirement condition could only be introduced if pensions were adequate in amount, Beveridge instead argued that the retirement condition would encourage older workers to remain in employment, thus weakening the case for adequate pensions. The irrelevance of this to the majority of future pensioners who would not be in the labour market (most of them women) was striking. For those in jobs (overwhelmingly men) it was also an odd justification, since by and large retirement was an event over which most older workers had no control. The actual outcome would be that rates of retirement would remain unaffected but substantial old age poverty would be built into Beveridge's brave new welfare state. Subsequent pages will describe how this reasoning took shape during 1942 as Beveridge bowed beneath the weight of Treasury pressure. 40

Social Insurance and Allied Services, appendix A, p. 197.

41

Ibid., p. 59.

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The 'Beveridge revolution'

The TUC General Council's position on the matter was quite clear. They were caught on the horns of a dilemma not of their own making: they argued strenuously for higher pensions, yet realised that every shilling added to the pension would result in equivalent wage cuts being imposed upon older workers. An improved pension carrying a retirement condition would both offer older workers the 'honourable retirement' long sought by the labour movement, and would also liberate jobs for the young. fiWe want to make them play', said one delegate, in somewhat authoritarian vein: 'They have been made to work, and we want to make some of them play and have leisure at the end of their lives: and we think they ought to make way for young people'.42 Beveridge completely disagreed with this reasoning. A radically improved pension would be too costly for the country to afford; and a retirement condition would not redistribute jobs to the young. If the only effect of 'adequate' pensions plus a retirement condition was to speed up the rate of retirement, as the TUC seemed to want, the cost of pensions would be driven even higher. This dilemma was reflected in Beveridge's address to the Committee on 11 February 1942, in which he posed the two inter-related questions of whether, firstly, there should be adequate old age pensions for all without any means tests '(a) at once; (b) ultimately; or (c) never?', and, secondly, whether there should be a retirement condition. Clearly, he was beginning to realise that answering the second question in the affirmative could be used to rule out option (a) in the first.43 Thus when the TUC representatives returned for another session of oral evidence on 6 May 1942, they found Beveridge much more receptive: he now thought the idea 'very interesting and attractive', though he still felt that there were some practical problems. He asked whether, for example, there should be a tapering income disregard, and found the TUC insistent that any working at all should result in forfeiture of the pension. 'We are certainly opposed to a pension of £2 a week to any person who continues in the same employment and expects to have that £2 in addition to his ordinary week's wages', said F. H. Wolstencroft.44 The retirement condition was an issue upon which other organisations took varying positions. Giving oral evidence on 20 May 1942, the National Federation of Old Age Pensions Associations insisted that a compulsory retirement condition could only be introduced provided 42

43 44

Statement by F. H. Wolstencroft, SIC(42) 9th Meeting, pt. 1, 6 May 1942, PRO CAB 87/77. SIC(42) 3rd Meeting, 11 Feb. 1942, ibid. SIC(42) 9th Meeting, pt. 1, 6 May 1942, ibid.

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that the pension was 'an adequate sum, which it is not at the moment', and that a couple should get double the single rate. However, when pressed on what constituted an 'adequate' pension, and how it should be funded, their confrontational campaigning style suddenly looked very out of place in the measured discourse of Whitehall: J. C. Birtles (the National Federation's president) stubbornly replied that 'how it is going to be arrived at or the rules governing it is another question, and that will have to be worked out on an economic basis'. The pension levels demanded by the Federation were £ 1.10s for a single pensioner and £3 for a married couple to be paid to all at the age of 60. 4 5 The British Employers' Confederation had no strong feelings either way; rather oddly, given all their work on the subject in the 1930s, Political and Economic Planning (PEP) disagreed with a retirement condition; the National Spinsters' Pensions Association wanted the women's qualifying age reduced to 55; and the Fabian Society proposed an interesting 'double-deck' scheme, whereby men of 65 and women of 60 would receive 10s Od per week pension if they continued at work. However, whenever they chose to retire they would receive an 'adequate' pension, but one not so high as to induce substantial retirement. 46 It has become something of a commonplace that the vast majority of organisations that gave evidence to the Beveridge Committee were in substantial agreement with each other, and that Beveridge simply packaged together this consensus in his Report. This view is not accurate. For one thing, Beveridge had laid out the essentials of his plan in the 'Basic Problems' memorandum of 11 December 1941, and thereafter used the Committee more or less as a rubber stamp for his fixed views. As Beveridge himself admitted with typical candour after the event: 'Once this memorandum had been circulated, the Committee had their objective settled for them and discussion was reduced to consideration of means of obtaining that objective'.47 Beveridge's autocratic style caused Edward Hale, the Treasury's representative, much irritation: privately, he complained to his Treasury colleagues that 'discussions on Committee have necessarily had to accept Sir W. B.'s major postulates as axioms'.48 Prior to its publication, the Treasury insisted that Beveridge remove a sentence indicating that government departments had 'given their views freely', since they felt that there had 45 46

47 48

S I C ( 4 2 ) 1 l t h Meeting, pt. 1, 2 0 M a y 1 9 4 2 , ibid. S I C ( 4 2 ) 11th Meeting, pt. 2 , 2 0 M a y 1 9 4 2 , ibid.; S I C ( 4 2 ) 17th Meeting, pt. 2 , 17 June 1 9 4 2 , and SIC(42) 26th Meeting, pt. 1, 26 July 1 9 4 2 , P R O C A B 8 7 / 7 8 . Lord Beveridge, Power and Influence (1953), p. 2 9 8 . Hale to Gilbert, 2 4 Sept. 1 9 4 2 , P R O T 1 6 1 / 1 1 6 4 ( S . 4 8 4 9 7 / 2 ) .

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been insufficient time to do this properly.49 And, of course, the civil servants requested that their names be removed as formal signatories of the Report; the public justification that this was because Beveridge had raised issues of policy concealed some personal resentment towards him. Transcripts of the oral evidence to the Beveridge Committee show how cleverly Beveridge cross-examined witnesses - coaxing them, interrogating them, joking with them, exposing inaccuracies and inconsistencies - but much of this evidence was used to bolster his preconceived ideas. Put under close scrutiny, the oral and written evidence of those sounded out by Beveridge contained considerable differences: a consensual explanation is thus somewhat misleading. In the case of pensions this is quite striking. There was a substantial difference between working-class bodies like the NFOAPA and the TUC, whose sanctioning of a retirement condition was predicated on the assumption that 'adequate' pensions would be paid, and middleclass 'expert' bodies like the Fabian Society, for whom the essence of the problem was the containment of pension costs in the future. As the chairman of the TUC put it to Beveridge, 'our replies are based on the assumption that we take it for granted they [pensioners] will have sufficient to live upon'.50 The most class-confrontational encounter was between Beveridge and the NFOAPA when the latter gave oral evidence on 20 May 1942. 'I hope our little interview may be beneficial to both sides', was H. W. Tyrell's rather sardonic opening comment. To Beveridge's argument that many pensioners did not need a universal pension of 30s Od per week, the National Federation impudently replied that this reasoning was never applied to the middle classes and their exceedingly generous occupational pensions. They were sceptical of the warnings that financial disaster would follow if their pension scheme were implemented, saying that they had heard all this before the war and how much was the war now costing? For the Federation, the pension 'should be granted as a right, as an award for services rendered' to the country. Most revealing was the moment when one National Federation representative declared that 'It is the bulk of the working classes of this country which has produced the wealth that we are using at the present time in the war', to which Beveridge replied: 'It is not a question, if I may say so, to me as between classes, it is a question of distribution of resources between different ages and different periods of 49 50 51

Hale to Beveridge, 2 Oct. 1942, PRO PIN 8/87. SIC(42) 9th Meeting, pt. 1, 6 May 1942, PRO CAB 87/77. SIC(42) 11th Meeting.

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51

one's life.' Clearly, there were two very different ideas of 'redistribution' being envisaged. By contrast, the representatives of the Fabian Society (William A. Robson, W. B. Reddaway and Joan S. Clarke) found themselves in substantial agreement with Beveridge. Like him, they portrayed the future as an impending demographic disaster in order to justify containment of pension costs. They acknowledged that 'society must provide adequate living standards for the aged; the removal of the fear of poverty in old age is an essential constituent of the health and welfare of the people in their working years'; but they went on to assert that 'the changing age-distribution automatically rules out the extremely generous schemes which are being canvassed in some quarters' - clearly a reference to the NFOAPA, as was the observation that the contribution principle was 'something of a check on irresponsible demands'. The Fabian Society's enthusiasm for the Report provides a vivid illustration of the extent to which liberal 'middle opinion' had become thoroughly infused with a savage ageism. Running through the Fabians' soporific gradualism was a brutal message. Crude demographic determinism was used to justify the abandonment of the subsistence principle for old people. Pension costs would escalate unless steps were taken to encourage deferred retirement. Thus old people should be encouraged to stay in work for as long as possible: 'By working, they contribute to the national income and to the state's revenue, whereas in retirement they contribute nothing.' Against a background of all the early-war evidence of substantial poverty amongst old people, they warned of the dangers of treating pensioners 'extravagantly', via 'excessive provision', since 'it would be a fundamental error in social policy unduly to divert resources to the aged at the expense of the young': thus 'each half-crown a week must be carefully weighed and calculated . . . The Report strikes a reasonable balance between impractical extravagance and inadequacy of benefit'.52 Beveridge shared these sentiments down to the last comma, and some of the choicest Fabian phraseology was to appear almost word for word as text in his Report. The difference between these two political perspectives is highlighted even further if we pause briefly to consider how each organisation received the publication of the Beveridge Report. As will be shown, the reaction of the National Federation was one of fury; nothing they had said in evidence to Beveridge had made the slightest impact. By contrast, William Robson felt that it was 'remarkable how large a 52

R. W. B. Clarke, 'Retirement Pensions', in Robson, Social Security, pp. 288-90; Clarke, 'Social Security Housekeeping', ibid., p. 363; Memoranda from Organisations, pp. 38-9.

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measure of agreement exists between the Beveridge Report and the Fabian Society'. This showed, declared Robson, that: the rational method can point the way to a specific and inescapable programme of action. It demonstrates that if persons with qualified and trained minds will apply themselves in a disinterested manner to a great social problem of this kind, the proper principles will emerge so unmistakably that the right solution will cease to53 be a matter of mere opinion and become a question of scientific knowledge. By the end of May 1942, Beveridge had decided to recommend a retirement condition with a small income disregard, to keep the eligibility ages at 60 and 65, and to build in some inducement to postpone retirement.54 But he was becoming very concerned about the precise meaning and economic implications of 'adequate' pensions. In the first draft of the Report, completed in July 1942, he set the pension rates at 25s Od (single) and 40s Od (couple) - the same level as unemployment benefit - plus increments for each year of postponed retirement. These levels were based upon 'subsistence' of 20s Od (single) and 32s Od (couple) at 1937 prices, plus an additional 25 per cent for inflation. But he was beginning to have doubts. Full subsistence pensions might have to be introduced gradually, 'if the financial difficulty of the scheme as set out in the draft Report appears excessive'. He still argued that 'inadequate pensions are probably inconsistent with a retirement condition',55 but it was clear that a crisis was approaching. The constraint of cost The first warning shot had been fired on 22 April 1942, in the form of a memorandum from Sir George Epps, the Government Actuary. Epps worked on the basis of the relatively low pension rates set in the 'Basic Problems' memorandum of 17 December 1941, and showed that, even with these modest rates (though aggravated by the absence of a retirement condition), the combination of several factors would push the pensions bill inexorably higher and higher. Out of a total UK population of 47,200,000, 3,560,000 were currently in receipt of a pension; but the total population aged over 60 (women) and 65 (men) was fully 5,500,000. Universal pensions would thus increase the number of pensioners by 30 per cent for men and women aged 70+, by 53 54

55

W. A. Robson, 'Preface', in Robson, Social Security, pp. 4 - 5 . S I C ( 4 2 ) 5 5 : 'Benefit Rates and Subsistence N e e d s : N o t e by the Chairman 5 , 29 May 1942, P R O C A B 8 7 / 8 0 . S I C ( 4 2 ) 1 0 0 : 'First Draft of Report by Sir William Beveridge, 10 July 1942', part IV, p. 11, P R O C A B 8 7 / 8 1 .

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45 per cent for men aged 65-70 and by over 95 per cent for women aged 60-70 (ignoring pensions to wives aged 55-60). The gross cost of pensions (before income from contributions) would henceforth be £251,000,000, an increase of nearly £146,000,000 on top of the existing cost of £104,500,000. Of this increase, £60,300,000 would go towards raising benefit rates to existing pensioners, and £72,000,000 on including new eligible classes. However, with pension levels like this there would be a substantial fall in the annual cost of supplementary pensions - from £27,500,000 to £7,000,000. The net cost to the Treasury would thus be £138,000,000 (a 49 per cent increase on the existing net pension bill) or, on a more pessimistic view of what could be raised in income from contributions, £178,000,000 (a 92 per cent increase). Either way, it would involve a massive rise in pension expenditure.56 Essentially, Beveridge had three options. The first was to grant universal pensions without a retirement condition. If set at the 'subsistence' level of other benefits (i.e. roughly 25s Od (single) and 40s Od (couple)), and granted without means tests (which a contributory scheme demanded) pensions would cost even more than Epps had forecast. Thus if pensions were not to be what Beveridge witheringly called 'an extravagance which cannot be justified' (in the sense that they would be enjoyed by older workers as well as by retirees without any other resources), they would have to be below subsistence. There would then have to be widespread supplementation by the Assistance Board, which had to be ruled out because it would be unpopular, 'contrary to social policy' (by which Beveridge meant the insurance principle that glued together the whole social security plan) and because 'any means test discourages thrift and saps independence'.57 Decoding this rhetoric, one cannot help concluding that a major concern of Beveridge's was that if social insurance were seen by the public as inherently incapable of delivering adequate pensions, its legitimacy would then collapse - thus opening the way to demands for a highly redistributive tax-funded scheme. He had always been acutely aware of this danger. For example, on 11 February 1942 he had warned his committee that the public might demand high pension rates immediately, without regard to contribution income, 'and any deficit made good by the Exchequer'.58 Thus for universal social insurance to be politically acceptable, it had to be seen to deliver adequate benefits. 56

57 58

S I C ( 4 2 ) 3 3 : 'Finance of the Chairman's Draft Proposals. M e m o r a n d u m by the Government Actuary', 2 2 April 1 9 4 2 , P R O C A B 8 7 / 7 9 . M e m o by Beveridge, 'Pensions Finance', 16 July 1 9 4 2 , Beveridge Papers VIII 3 3 . SIC(42) 3rd Meeting, 11 Feb. 1942.

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The second option was to raise the minimum pension-eligibility age (especially for women). This Beveridge quickly dismissed as politically impossible, given that the age of 65 for men had become embedded in public consciousness, with women recently winning the victory of a lowered age. Besides, the spread of retirement in the future would make it impossible to maintain a higher pension age. In some ways, this was an odd decision. The war economy had re-enlisted many older workers into industry - including many temporary women workers - and this temporary shift might have weakened opposition to such a change. But abruptly to have reversed the policy of 1940 was judged too politically contentious. This left the third option, which Epps had shown was the only course of action that would contain future pension costs - to renege on any commitment to immediate full subsistence pensions, and to build into the new scheme inducements not to claim the pension. Full subsistence pensions would only be granted after the scheme had been running for several years and building up contribution income. Meanwhile, there would be financial incentives to delay retirement by increasing the rate of pension for each year of postponement. Contrary to what the TUC wanted, the retirement condition would be presented as designed to encourage the postponement of retirement. The signs of this 'new realism' began to show themselves in Beveridge's thinking over the summer of 1942. As Treasury pressures increased, so Beveridge's arguments became more ingenious. The first drafts of the Report were circulated to government departments. As the hostile reactions began to come in, Beveridge gradually whittled down his pension scheme. On 16 July he warned his Committee that 'the rinding of money for pensions is the crux of social insurance finance': pensioners were going to be the largest single group of clients in the future, absorbing at least 60 per cent of benefit expenditure. And this cost would increase rapidly: in 1937 pensioners had formed 1 in 12 of the population, but by 1971 this would be 1 in 6. Thus measures to encourage postponement of retirement 'should be a cardinal feature of social policy'. However, Beveridge still envisaged pensions at an 'adequate' level, acknowledging that a scheme which fixed pensions below subsistence would be neither 'politically possible' nor 'defensible on its merits', because of the undesirability of continuing supplementary pensions. Interestingly, at this stage he also admitted that the retirement condition should not be used to justify inadequate pensions - 'to give those who must retire inadequate pensions cannot be justified by the fact that others do not need to retire' - and, while suggesting a rising rate of pension for every year of postponed retirement, he assumed that

The origins and working of the Beveridge Committee

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this would start from subsistence-level pensions. Thus he envisaged that men retiring at 65 would still receive (at 1942 prices) 22s 6d (increased by Is 3d for each year that retirement was postponed, to a maximum of 30s Od), and women retiring at 60 would receive 20s Od (increased by Is Od for each postponement year, also to a maximum of 30s Od). The lower rate for women was justified by their earlier retirement age. These levels were only slightly below those for unemployment benefit, so the original principle of equal benefits for all had not yet been abandoned. But, in view of 'the imperative need for economising' on pensions expenditure, he was beginning to argue that the higher levels suggested in the first draft of the Report 'treated retirement with unnecessary generosity'. The concept of subsistence was being slowly nibbled away. Driving all these considerations was not any downward revision of 'scientific minimum subsistence' but the fact that, in Beveridge's mind, 'the money available for pensions' was a fixed sum.59 Over the next two months, the money available for pensions was to shrink even further. The Keynes-Beveridge talks For most of the Beveridge Committee's proceedings, the Treasury representative, Edward Hale, had acted as a most effective conduit to his colleagues. On 22 December 1941 he warned Bernard Gilbert that, from the very beginning, it had been clear that Beveridge 'intended to range wide and deep', and gave a rather sardonic summary of the main proposals contained in the 'Basic Problems' memorandum.60 It was when the first drafts of the Report were circulated round government departments for their formal responses in July 1942 that the issue of the plan's overall cost really blew up. Beveridge was still of the view that a retirement condition necessitated adequate-level pensions of 25s Od per week (single) and 40s Od per week (couple); he had raised these from the 17s 6d and 30s Od levels speculatively proposed in 'Basic Problems'. Working roughly on these figures, Hale estimated that the new social security scheme would cost £400,000,000 - more than twice what the existing income maintenance services were costing - and warned his Treasury colleagues accordingly.61 Faced with Epps's preliminary estimate of April 1942, especially 'the proposal to squander vast sums upon the old without even an income test', Sir Richard Hopkins (deputy secretary to the Treasury) had been 59

60 61

Memorandum by Beveridge, Tensions Finance', 16 July 1942, Beveridge Papers VIII 33. Hale to Gilbert, 22 Dec. 1941, PRO T 161/1164 (S.48497/1). Hale to Gilbert, 19 June 1942, ibid.

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horrified: he recognised that income tax liability would probably have to be extended down the range of earnings after the war, but warned that 'the cumulative effect of annual concessions to the poorer ranges thrusts continually more and more on to the wealthy and moderately wealthy'. High levels of taxation would also depress trade and enterprise.62 Hopkins greeted the first draft of the Beveridge Report with equal dismay: 'We have been prepared for a long time past for shocks', he acknowledged, but complained that the Report contained so many new recommendations and contentious 'assumptions' that it had 'all the imprints of a political broadsheet'.63 Concern over the possible cost of the Beveridge proposals led to an intense burst of intra-Whitehall politicking. Memoranda on the financial implications circulated urgently, with most concern being expressed on pensions: Beveridge later observed that, at this crucial stage, the finance of the entire scheme was 'coming ever more to depend on what we did about pensions for those already at or near the pensionable age'. 64 It was at this point that there took place a series of meetings between Beveridge and his old friend Maynard Keynes (now a Treasury adviser) and, between the two of them, they came up with a package of cuts that would render the Report more acceptable in Whitehall. Throughout, Keynes was supportive of the Beveridge plan: he had started out 'in a state of wild enthusiasm' for the general scheme, but was concerned about the cost of pensions, since he shared the prevailing Whitehall view that social capital considerations required that the needs of children should be given priority.65 He thus agreed to use all his persuasive powers to win the Treasury's support, provided that Beveridge cut his scheme so that the additional cost to the Treasury was kept to £100,000,000 per annum for the first five years of the new scheme's operation. The effect on the pension scheme was dramatic. These meetings are worth recording in some detail, since they reveal much about the making of the Beveridge Report. In particular, they illustrate vividly the way that cardinal principles of social security can be suddenly abandoned in the face of economic pressures. The two great architects of the post-war settlement had a longstanding friendship, albeit one laced by a touch of intellectual rivalry. Their meetings were exceedingly cordial - held over lunch or dinner and it is quite wrong to portray Beveridge as the unwilling victim of 62 63 64 65

M e m o by Hopkins, 'Rough N o t e s o n the Beveridge Scheme', 26 June 1 9 4 2 , ibid. Hopkins to Sir Horace Wilson, 16 July 1 9 4 2 , P R O T 1 6 1 / 1 1 6 4 ( S . 4 8 4 9 7 / 2 ) . Beveridge, Power and Influence, p. 3 0 9 . Keynes to Beveridge, 17 March 1 9 4 2 , and 25 June 1 9 4 2 , in D o n a l d Moggridge (ed.), The Collected Writings of John Maynard Keynes, vol. XXVII: Activities 1940-1946

(1980), pp. 204,219.

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Treasury parsimony. It was Beveridge himself who suggested the meetings, in a letter to Keynes in March 1942. 66 From the beginning, Keynes was confident that his task as intermediary would be relatively easy: he reassured Hopkins by saying that, if Beveridge could cut £100,000,000 off the pensions bill, 'he would have a pretty plausible tale to tell'.67 There was no very great disagreement between the two men. Essentially, they were both 'on the same side', in terms of shared class loyalties, and their discussions were really symbolic of the split that had opened up within government over the Beveridge proposals - between what can rather crudely but conveniently be called the 'liberals' and the 'conservatives'. In the former camp were Beveridge, D. N. Chester (the Committee's secretary), Keynes and Lionel Robbins; in the latter were the career Treasury mandarins (notably, Hopkins, Gilbert and Hale). To an extent, the split also reflected personal friction between the temporary wartime advisers and the professional civil servants. Both factions agreed that it was imperative to place strict limits on the redistributive potential of social security, and that social insurance was the way of achieving this. They were acutely aware that far more radical proposals for an entirely tax-funded pension scheme lurked in the wings, and had to be kept from the political centre stage. Thus Beveridge 'was strongly of the opinion that benefits must be paid for',68 and this over-riding economic concern resulted in the Beveridge Report being littered with moralistic phraseology on the civic virtues of social insurance: it was repeatedly portrayed as enhancing the psychological self-esteem of ordinary citizens. 'The first view is that benefit in return for contributions, rather than free allowances from the State, is what the people of Britain desire . . . Management of one's income is an essential element of a citizen's freedom', declared Beveridge, going on to offer the growth of voluntary insurance as evidence that this method of funding 'has been found to accord best with the sentiments of the British people'. 69 As has been shown in an earlier chapter, this was not the view of the British labour movement, who argued from first-hand experience that the growth of voluntary insurance was primarily a tribute to the inadequacy of state services. To be sure, there was some intellectual game-playing within the Treasury on the question of social insurance: most notably, in a famous 66 67 68

69

Harris, Beveridge, p. 408. Keynes to Hopkins, 30 June 1942, PRO T 161/1164 (S.48497/1). Memo by Keynes, 'The Beveridge Plan for Social Security', 11 Aug. 1942, PRO T 161/1164 (S.48497/2). Social Insurance and Allied Services, pp. 1 1 - 1 3 .

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internal memorandum (later published), H. D. Henderson indulged in speculation on the relative merits of insurance and tax funding and, playing devil's advocate, suggested that the latter was fairer.70 Keynes's contribution to this little debate was interesting: he acknowledged Henderson's point that flat-rate social insurance contributions were a regressive poll tax on the low paid, and that the social insurance fund was always something of a fiction, but argued that the contributory principle was an important device for educating consumers in the real costs of a public service, and thus minimising abuse.71 Edward Hale got to the heart of the problem. Because of its administrative complexity, an income maintenance system based on social insurance was 'a lot of tiresome make-believe' and it would be 'much simpler to finance the whole thing out of taxation and treat each case as one requiring assistance'. Hale went on: Why do we not do this? From the Treasury point of view it has always seemed to be important to maintain in the mind of the insured person the illusion that the benefit for which he qualifies is something for which he pays by his contribution because that contains the implication that if benefit is to be increased, the contributions required to pay for it will have to be increased also.12

What really divided the two Treasury factions was not the need for the protective walls of social insurance (upon which they were in complete accord), but the question of how far the new social insurance scheme should, for reasons of political expediency, depart from strict actuarial principles. Keynes expressed the prevailing view of the 'liberals' that the Beveridge scheme was 'by far the cheapest we ever had a hope of getting'.73 The Treasury old guard were much less politically farsighted: they failed to appreciate the value of social expenditure as a tool of political legitimation and tended to see it as only ever economically dysfunctional. Most of all, they feared setting off a 'revolution of rising expectations', as had happened after the First World War. Hale warned: 'I think that there is a very real danger that if the link between contributions and benefits is lost, we shall be in for "panem et circenses" politics of the worst kind.'74 Likewise, Hopkins was aghast: 'It is against this kind of thing that it seems to me one ought to take a stand', he minuted of the Report's first draft, complaining that 'this is not an

70

71 72 73 74

H . D . Henderson, 'The Principles of the Beveridge Plan', in H . D . Henderson, The Inter-War Years and Other Papers ( 1 9 5 5 ) , pp. 1 9 1 - 2 0 8 . Keynes to Hopkins, 2 0 July 1 9 4 2 , P R O T 1 6 1 / 1 1 6 4 ( S . 4 8 4 9 7 / 2 ) . Hale to Gilbert, 21 July 1 9 4 2 , ibid. (Hale's emphasis). Keynes to Gilbert and Hopkins, 15 M a y 1 9 4 4 , P R O T 161/1165 ( S . 4 8 4 9 7 3 ) . Hale to Gilbert, 21 July 1 9 4 2 , P R O T 1 6 1 / 1 1 6 4 ( S . 4 8 4 9 7 / 2 ) .

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insurance scheme in anything except name', and fearing that eventually the whole cost would fall upon the Exchequer.75 It was really a disagreement over tactics. The former camp believed that the Beveridge pension scheme would be accepted by the public, and thus the challenge of the pensioners' lobby could be beaten off: as Keynes put it, the Report would 'impress public opinion as at the same time moderate and far-reaching'.76 The latter camp believed that Beveridge's proposals were too generous, that they would require punitive levels of taxation after the war, and that their balance of insurance and tax funding rendered them too vulnerable to the kind of popular pressure that had built up in the late 1930s for an entirely taxfunded scheme. Both sides were in complete agreement that the cost of making pensions universal could result in something of a public expenditure nightmare, unless checks were built in. It was thus imperative to keep the level of the pension as low as possible. This placed Beveridge in a real dilemma. As we have seen, by the summer of 1942 he had conceded to the logic of setting the starting level for pensions at 22s 6d for men retiring at 65 and 20s Od for women retiring at 60, with increments for each year of postponed retirement. At this level, they would harmonise reasonably closely with other benefits (though still slightly below them), would remove the need for Assistance Board supplementation, would justify the retirement condition (as the TUC argued) and would to an extent appease the pensioners' lobby. Keynes's task was to get him to shift from this position. The two men met on 6 and 7 July 1942. It was the latter meeting, over lunch, that revealed most clearly the fundamental agreement between the two. Keynes had no difficulty persuading Beveridge to abandon the stance he had taken in the first draft of the Report. Beveridge was quite willing to consider pensions 'at much lower rates'. Keynes suggested a pension level 50 per cent above the pre-war figure of 10s Od, and found Beveridge most co-operative, recording 'He has by no means closed his mind to pensions on a much lower scale, such as 15s Od single and 25s Od double. Indeed, he said that he had started with that sort of figure in mind himself.'77 In this meeting, Keynes's cool forensic skill stripped away the arguments for subsistence pensions. The higher figure of around 24s Od per week had been fixed in order to produce uniformity with other 75 76

77

M e m o by Hopkins, 21 July 1 9 4 2 , ibid. M e m o by Keynes, 'Sir William Beveridge's Proposals', 13 Oct. 1 9 4 2 , T 161/1164 (S.48497/2). M e m o by Keynes, 'Notes on Conversation with Sir William Beveridge', 7 July 1 9 4 2 , PRO T 161/1164 (S.48497/1).

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benefit levels, so that pensions could be said to be at what Keynes, with cynical accuracy, called 'the alleged subsistence level'. But this amount would only be needed by a pensioner who paid rent of 10s Od per week and had no savings, no financial help from family members and no capacity to earn anything. The likely proportion of future pensioners in this situation could have been ascertained from the Assistance Board. By 1942, over 1,300,000 pensioners (37 per cent of all pensioners) were receiving Assistance Board supplements. But Keynes brushed such potentially inconvenient evidence aside, concluding that 'it was a matter for argument' whether or not it was correct to assume this as the normal situation. The question really came down to the scope of assistance supplementation for the poorest pensioners in the future (most of whom would have been women - though this was never mentioned). Having declared that the principle of subsistence-level insurance benefits, paid as of right with no means tests, was central to his new social security plan, Beveridge was now open to persuasion to have that principle withdrawn from the largest single group of future claimants. The matter was left unresolved. However, Keynes was optimistic. He concluded, 'I do not think it would be difficult to persuade him to come down to the lower figure, which would make a vast difference on the financial side.'78 So much for subsistence. The second, inter-related economy was what later came to be known, rather euphemistically, as 'the golden staircase': that full subsistence pensions should only come about after slowly rising increments spread over twenty years (initially suggested as sixteen years), starting in 1945. Once again, Beveridge was compliant indeed he seems to have even taken the initiative on this. The idea was referred to by Keynes as 'his [Beveridge's] own transitional arrangements', and 'those pension economies he himself was taking credit for'.79 This accords with Beveridge's own characteristically frank recollection in his autobiography: 'I found myself able to satisfy Keynes's condition for support, provided that I spread the introduction of adequate contributory pensions over a substantial period of transition. I wanted to do this in any case. 80 Keynes then returned to the Treasury, and tried to assuage the fears of Sir Richard Hopkins. Two economies were very near agreement - the exclusion of the first child from the family allowance scheme, and the transitional arrangements for full subsistence pensions. There still remained the need to cut pension levels by about one-third from the amount proposed in the first draft of the Report. However, matters were 78 79 80

Ibid. Ibid.; Memo by Keynes, 'The Beveridge Plan for Social Security', 11 Aug. 1942, ibid. Beveridge, Power and Influence, p. 309.

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held in abeyance until revised estimates of the total cost of the Beveridge scheme were forthcoming from the Government Actuary, Sir George Epps. In the middle of August, Epps circulated his new estimates, based upon the draft Report's ultimate pension rates of 25s Od per week (single) and 40s Od (couple), conditional upon retirement, and with the financial inducements to postponement already agreed (increments of Is 3d per week (single) and 2s 6d (couple) for each year of deferred retirement). These estimates were on the pessimistic side, and it is puzzling that they were made while the economy discussions were still in progress and unresolved: this was, after all, the most 'generous' version of all the pension level alternatives considered by Beveridge. The gross cost of retirement pensions (before income from contributions) was now a predicted £308,000,000 (compared with £104,000,000 for unemployment benefit and £163,000,000 for children's allowances at that stage); they would initially cover 1,200,000 men and 3,550,000 women retirees. Epps warned that the only item of social security that would be likely to change in the future would be pensions, because of demographic trends. All in all, Epps's calculation was that the total package of Beveridge's proposals would result in a gross expenditure increase of £426,000,000 which, after income from contributions, would leave a net increase in Treasury expenditure of £240,000,000 per annum.81 On 10 August Keynes and Beveridge had met again, for two hours. Once more, it was a very harmonious meeting. Keynes went through the estimates prepared by Epps and distinguished the essential 'bedrock' scheme from the full scheme which, he argued, could be introduced later if it were considered financially impossible now. To keep to the £100,000,000 per annum net additional cost, there were basically three options: limiting the scheme to the present insurance categories; lowering rates of benefit; and excluding the first child from family allowances. Beveridge opposed the first, but agreed to the second and third. Unemployment and sickness benefit would have to be shaved down a little from their proposed 25d Od per week, and pensions would have to be cut considerably. The two men were gloomy over pensions. Public opinion might demand the same basic pension for all (at about 25s Od per week), and the cost of this would be 'appalling'. Keynes believed that the retirement condition would be resented by the public as 'a drastic means test', and would be unworkable in practice: it was 'about as fully charged with unpopularity as anything one could well conceive'. At this stage, 81

SIC (42) 137: Memorandum by Sir George Epps, 'Finance of the Proposals in the First Draft of Chairman's Report', 17 Aug. 1942, PRO CAB 87/82.

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The 'Beveridge revolution'

Beveridge was still clinging to the TUC's logic that a retirement condition necessitated subsistence-level pensions. Thus Keynes concluded that the retirement condition was the principal obstacle in the way of a substantial cut in the pension level. If we could wean him away from the retirement clause', minuted Keynes, 'he would, I think, readily give up the excessive basic rate of pension. This is what we must concentrate on'. 82 Another meeting took place on 21 August. By this time, Beveridge had cut his pension levels even lower than Keynes had suggested: the starting rates were to be 14s Od (single) and 25s Od (couple), with increments of Is Od for each two years that retirement was postponed, to a maximum of 24s Od and 40s Od (the same level as unemployment benefit). The retirement condition was retained, but Beveridge ingeniously used it in exactly the opposite way suggested by the TUC: since its purpose was to discourage retirement, in order to contain costs, pension levels should be below subsistence. To fix pensions at subsistence might induce too many older workers to retire. In a remarkable volte-face, the TUC's logic had been turned on its head. Finally, Keynes, Beveridge, Epps and Robbins met on the morning of 24 August. The cuts had been made, and Keynes thereafter kept his part of the bargain and set about persuading the Treasury and other critics within government that the Report should be accepted. With brutal accuracy, he noted that Beveridge 'will propound his scheme as being a scheme for pensions of 24s Od single and 40s Od double, but in fact no-one who is now above 45 years of age will receive pensions at this rate, and this will not be the generally prevailing rate for thirty or forty years.'83 As we shall see, this was to be exactly the disillusioned view of the pensioners' lobby. Where old people were concerned, the subsistence principle - even as a legitimating device - was now unceremoniously abandoned. In the course of these discussions, Beveridge returned to the draft of his Report and began to construct a series of arguments to show that 'subsistence' was an arbitrary and capricious concept. There were a number of factors that made the calculation of subsistence levels in the future 'to some extent a matter of judgement', he maintained. The future cost of living was uncertain, and it could vary region by region. Rent levels differed greatly between households, and insurance benefits based on the flat-rate principle could not take account of this. Again, subsistence 82

83

M e m o by Keynes, 'The Beveridge Plan for Social Security', 11 Aug. 1 9 4 2 , P R O T 161/1164 ( S . 4 8 4 9 7 / 2 ) . M e m o by Keynes, 'A Further N o t e o n Sir William Beveridge's Social Security Proposals', 2 4 Aug. 1 9 4 2 , ibid.

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needs would vary between different groups in the population. Underpinning all these theological niceties on precisely what constituted 'subsistence' was the need to avoid any 'unnecessary expenditure on retired persons, in view of the very large number of such persons and the resulting burden upon the working population'. Hence whereas only a month before, the level of the pension had been set just below the level of unemployment benefit, by August 1942 'the imperative need for economising' had made this 'unnecessary generosity'.84 Impelled by these new fiscal constraints, Beveridge composed two memoranda on pensions, which formed the basis of the published Report's part 3, section II, revealingly entitled 'The Problem of Age'. This was a conspicuous addition to the first drafts of the Report, and the difference between the first and final drafts is a vivid illustration of how vulnerable to economic pressures were Beveridge's cardinal principles. Much of the contents of these memoranda were identical to the subsequent published version; but, revealingly, before publication they were censored for public consumption, and some of Beveridge's more aggressive phrases were cut as skilfully as were his pension levels.85 Old age, Beveridge warned, would become increasingly expensive as demographic changes caused the retired population to grow in number in the future. But not all pensioners were in poverty: Rowntree had found one-third to be below the poverty line in York in 1936, which was nearly the same proportion of contributory pensioners who had qualified for supplementary pensions at the end of 1941. The central dilemma was expressed by Beveridge in characteristically unsentimental terms: On the one hand the provision made for age must be satisfactory; otherwise great numbers may suffer. On the other hand every shilling added to pension rates is extremely costly in total; it is dangerous to be in any way lavish to old age, until adequate provision has been assured for all other vital needs such as the prevention of disease and the adequate nutrition of the young.86 This was exactly the 'social capital' or 'reproduction of labour' reasoning that the Treasury had used in the late 1930s to argue that pension expenditure was wasteful. A clear indication that Beveridge began from the assumption of a fixed amount of available public expenditure rather than scientific minimum subsistence was contained in the very first page 84

85

86

'Subsistence N e e d s and Benefit Rates. M e m o r a n d u m by the Chairman', 14 Aug. 1 9 4 2 , PRO CAB 87/82. T h e final revised drafts of various parts of the Report (September and October) are contained in P R O C A B 8 7 / 8 1 . S I C ( 4 2 ) 1 3 6 : 'The Problem of Age. M e m o r a n d u m by the Chairman', 2 0 Aug. 1 9 4 2 , PRO CAB 87/82.

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The 'Beveridge revolution'

of his draft on 'The Problem of Age': 'On the proposals made in the draft Report, retirement pensions with supplementation would absorb nearly three-fifths of the total expenditure on cash benefits and pensions, leaving little more than two-fifths for unemployment, disability, widowhood, maternity, funerals and furnishing.'87 It would thus be impossible to grant full subsistence pensions to the first cohorts of retirees under the new plan. Beveridge's rationale for this handed future governments a recipe for endless delay, based on deference to economic vested interests: pensions could only be raised to subsistence level when Britain's national income was built up again after the disturbances of war, once private pension schemes had adjusted themselves to the new level and coverage of the state pension, and once various problems in the calculation of subsistence (such as variations in rents) had been resolved. The retirement condition was now deployed quite crudely to justify the abandonment of subsistence. To those, such as the NFOAPA and the TUC, who saw adequate pensions as an essential prerequisite of a retirement condition, Beveridge responded: It may be argued that it is unreasonable to require retirement as a condition of pension unless and until the pension is adequate for subsistence. This might be so if the object in view was to encourage retirement. That, however, is not the policy underlying these proposals. On the other hand it is unreasonable for an individual to demand more pension than he is now receiving, or indeed any pension, as a88birthday present, while announcing his intention to go on working and earning. (This appears as paragraph 249 of the Beveridge Report, but with the last sentence toned down for public consumption.) Postponement of retirement was essential in order to contain costs. This had to be the case, if the new arrangement was to effect savings. Somewhat unconvincingly, Beveridge had maintained that the new rates 'can hardly be criticised as likely to inflict serious hardship or cause any considerable call for supplementary pensions'.89 This was unrealistic, since those most in need of income support when they reached minimum pensionable age would be female. As in other discussions, the pension needs of women received scant attention. Social insurance was to build solid protective walls round the pension scheme. 'Political pressure at this point is likely to force up pension expenditure more and more', Beveridge had warned a month earlier no doubt with the National Federation in the forefront of his mind.90 87 89 90

88 Ibid. Ibid. M e m o by Beveridge, T e n s i o n s Finance', 16 July 1 9 4 2 , Beveridge Papers VIII 3 3 . Ibid.

The origins and working of the Beveridge Committee

381

Accordingly, the contributory principle, which Beveridge took axiomatically to be 'good in itself and in accord with popular sentiment' had 'special advantages in relation to the problem of pensions. It both justifies and requires postponement of payment of full subsistence pensions as of right.'91 Thus full subsistence pensions could only come after sixteen years (soon raised to twenty years) of transition, during which those in need would have to receive supplementation from the Assistance Board. A retirement condition was essential: in one of the sentences conspicuously left out of the published Report, Beveridge warned that: 'It would be reprehensible extravagance to give a full subsistence income to every citizen, as a birthday present on his or her reaching the age of 65 or 60.' 92 The new pension was a retirement pension, and not an old age pension: there was, in fact, 'no fixed age for retirement, but only a minimum pension age . . . at or after which each individual has the option of retiring and claiming pension'. Everything should be done 'to encourage every person who can go on working after reaching pensionable age to go on working'. In another sentence altered before publication at the very last minute, Beveridge warned that: 'If these pensions are adequate for subsistence - a wholly unjustifiable extravagance - they will, on the contrary, encourage retirement.'93 In these unpublished memoranda, the ferocity of Beveridge's ageism was very striking. Where the published Report spoke of 'strong public opinion' in favour of full subsistence pensions, the earlier drafts dismissed this as 'sentimental and political reasons', warning of the dangers of granting pensions as 'a birthday present'. In another sentence left out of the Report, he even went so far as to insist that the state should reserve the right to reduce pensions below subsistence if the cost of living fell, or if there was an economic recession. 94 All that remained was for Sir George Epps to approve the new estimates. The final drafts of the Report were completed in late September and October 1942, and submitted to him. He composed a final estimate on 10 October, and this was incorporated in the published 'Memorandum by the Government Actuary' (Appendix A to the Report). 95 This memorandum makes for interesting reading. Stripped of the beguiling Beveridge rhetoric that leavened the main Report, we 91 92

93 95

'The Problem of Age'; Social Insurance and Allied Services, p. 93. Memo by Beveridge, 'The Problem of Pensions', 19 Aug. 1942, Beveridge Papers VIII 33. 94 Ibid. Ibid, and 'The Problem of Age'. SIC(42)166: 'Finance of Proposals in SIC(42) 100(Revise). Note by the Government Actuary', 10 Oct. 1942, PRO CAB 87/82; Social Insurance and Allied Services, appendix A.

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The 'Beveridge revolution'

Table 15.1. Estimated expenditure in 1945 (£ millions) Beveridge scheme

Existing social insurance scheme Contributory pensions (old age and widows) Non-contributory pensions Supplementary pensions Total pensions

£106

Retirement pensions Widows' and guardian benefits Assistance pensions

£126 £29 £39

Total pensions Unemployment benefit Children's allowances

£194 £110 £110

£47

£163

can see how successful had been the strategy of containment, as shown in table 15.1. Pension expenditure was to rise by only 20 per cent, despite the move to universal pensions. The 'social capital' motivation throughout Beveridge's discussions was also very evident: whereas in Epps's first financial estimate the gross cost of pensions had been three times greater than unemployment benefit and twice as great as children's allowances, now it was brought more into line. In the sharing out of the fixed and 'acceptable' sum of public expenditure for improved social security, the retired were to have a low priority because of their marginal labour market value. As Epps himself pointed out, there would be a 70 per cent increase in overall social security expenditure, and two-thirds of this arose from the introduction of children's allowances and contributions to the proposed new National Health Service. Gross social security expenditure was to rise from an anticipated £415,00,000 in 1945 (had the existing scheme remained), to £697,000,000. But Keynes had been successful: after increases in contributions, the additional burden on the Treasury would be only £86,000,000, and its proportionate contribution fell from 61 per cent to 50 per cent.96 The complex negotiations of the summer of 1942 were reflected in the published Report. The new retirement pension scheme commenced at only 14s Od (single) and 25s Od (married couple) per week, rising every two years by increments of Is Od (single) and Is 6d (married), so that the full rates of 24s Od and 40s Od respectively would only be attained after twenty years, in 1964. The full implications of the Beveridge settlement can be seen in table 15.2. Line 1 shows the monetary value of the basic state pension. Line 2, based upon the official Ministry of Labour cost-of-living index (which was not a wholly accurate reflection of pensioners' budgets) 96

Social Insurance and Allied Services, appendix A, pp. 204—7.

The origins and working of the Beveridge Committee

383

Table 15.2. Pension values, 1914-1946 1914

1920

1. Pension 5s Od 10s Od 252 2. Cost of 100 living index 3. Real value 7s 4d of pension, if5s0d=100 4. Real value if 1939=100 (perspective of campaigners in 1940s) 5. Therefore, needed to keep pace with inflation 6. Pension plus AB supplementation single: couple: 7. As proposed by Beveridge single: couple: 8. As demanded by NFOAPA (couple's rate=double single)

1930

1939

1942

1946

10s Od 155

10s Od 158 100 12s Id

10s Od 200 129 10s Od

26s Od 203 131 -

10s Od

7s Id

10s Od

12s l i d

13s Id -

20s Od

22s Od 36s Od 14s Od 25s Od (1944) 30s Od

12s 6d

6s l i d

15s Od 26s Od (1946) 40s Od

shows that, after a brief period of post-war inflation, the fall in the cost of living in the inter-war years improved the real value of the pension (a point strongly made by the Treasury), although it fell back to its original real value during the Second World War. However, for obvious reasons, pensioners did not make a comparison with the early 1920s; hence line 4 shows the National Federation's case that an improvement in the pension was urgently needed merely to keep pace with wartime inflation. Beveridge's recommended (starting) pension level for 1944 (line 7) thus represented a 4s Od monetary increase in the existing pension, but, given the effect of inflation, this was in fact only a Is Id increase, and was well below the amount a pensioner could obtain if he or she applied for Assistance Board supplementation (line 6). The demands of the National Federation are given in line 8; the actual pension level implemented in 1946 went some of the way to meeting its 1942 demand. As argued earlier in this section, the move to universality had included a larger number of old people, but, more importantly, it had legitimated the shift to total insurance funding, which in turn had provided very effective arguments for holding down pension levels. Another economy measure which contained costs was that the inducements to postpone retirement were worth less to a pensioner than the true actuarial value of the postponement. The married couple's joint pension was to be paid

384

The 'Beveridge revolution'

irrespective of the age of the wife, but for the first time a married couple were to receive less than double the single rate. Compared to the taxfunded, gender-blind, citizenship pension of 1908, the pension rights of married women had been seriously eroded by the shift to complete insurance funding. The ratio of women to men pensioners in the new scheme was to be higher than ever before: 3,500,000 women and 1,200,000 men - a ratio of 3:1, where in the 1908 scheme it had been 2:1. Yet Beveridge repeatedly portrayed the married couple's pension as the property of the man: for example, he declared in the Report that 'a married man . . . who reaches the age of 65 in 1949, if he then retires will receive a basic pension of 28s Od a week'.97 Perhaps the most significant implication of all was the fact that, as Beveridge admitted, the Assistance Board would have to continue topping up these inadequate pensions by means-tested supplements. The Beveridge social security scheme was thus to withhold from its largest client group for the next twenty years that principle that was most central to it insurance-based subsistence benefits as of right, without means tests. For the foreseeable future, subsistence pensions had been abandoned, yet the retirement condition was to be introduced immediately, thus contradicting the Report's own assertion that 'making retirement from work a condition of pension is a logical consequence of giving adequate pensions'. 98 In effect, Beveridge had deftly combined the principles of universality and selectivity, via two distinct pension schemes. One would be based on the principle of universality as a sweetener to public opinion, but would offer low pension levels held down by the contributory principle. The other would be the continuation of the means-tested supplements begun in 1940; it would target the poorest pensioners, but would be hedged in with strict safeguards (notably central control by the quasi-autonomous Assistance Board, thus 'taking relief out of polities'). By this means, the political challenge from bodies like the National Federation would be neutralised. Universality and selectivity thus existed side by side. However, these and other internal contradictions within the Report were the price paid for deference to political and economic realities. With the pension problem finally resolved, the Beveridge Report could now go forward to publication. 97

Social Insurance and Allied Services, para. 246.

98

Ibid., para. 54.

16

After the Beveridge Report, 1942-1948

In the final months leading up to the Beveridge Report's publication, some ministers in the Churchill government began to view its recommendations with growing alarm. News of its contents had become Whitehall gossip by the summer of 1942 (fed by sources such as Edward Hale's regular reports to his Treasury colleagues) and, in addition, Beveridge himself had been leaking information to the press in order to ensure that publication would not be held up by the Treasury.1 In October 1942, Brendan Bracken, Minister of Information, warned Churchill of this and said that 'some of Beveridge's friends are playing politics . . . when the Report appears there will be an immense amount of ballyhoo about the importance of implementing the recommendations without delay'. Other ministers were equally uneasy: Kingsley Wood, Chancellor of the Exchequer, had serious reservations about the total cost of the scheme, complaining that 'the time for declaring a dividend on the profits of the Golden Age is the time when these profits have been realised in fact, not merely in imagination'. Sir William Jowitt met with Beveridge on 8 October and expressed concern 'lest he should advocate schemes which would open the flood-gates of claims for all sorts of social expenditure'; he was also worried about whether the cabinet would be able to stop Beveridge expounding his own personal views on the Report while it was under consideration by the government. Lord Cherwell - whose personal influence on Churchill was great warned that to declare acceptance of the whole Report (and its attendant cost) might affect post-war economic forecasting and hinder the delicate negotiations for the extension of lend-lease then being conducted with the USA. 2 Cherwell's point struck home, and the Prime Minister asked Jowitt (now in charge of post-war reconstruction) to delay official approval of the Beveridge Report until the negotiations with the USA 1 2

Henry Pelling, Britain and the Second World War (1970), p. 169. Bracken to Churchill, 27 Oct. 1942; Wood to Churchill, 17 Nov. 1942; Jowitt to Churchill, 23 Nov. 1942; Cherwell to Churchill, 25 Nov. 1942: PRO PREM 4/89(2) (Part II); Jowitt to Wood, 9 Oct. 1942, PRO T 161/1164 (S.48497/2).

385

386

The 'Beveridge revolution'

had been successfully completed.3 Thus when Beveridge requested a press conference to expound his views prior to publication of the Report, it was flatly refused - 'once it is out he can bark to his heart's content', was Churchill's acerbic comment4 - and the cabinet agreed that not only should the practicality of the Report's recommendations be carefully scrutinised, but it should also be considered in relation to other reconstruction measures which might have greater priority.5 However, public opinion was becoming increasingly hungry for news of post-war reconstruction. Early in November 1942 came the news of the Allied victories in North Africa, which seemed to mark a significant turning point in the long military struggle. After the two hardest years of the war, the British people were desperately eager for a morale-booster. Significantly, the news from North Africa brought a sudden rise in public support for the government: between late September and late November 1942, it rose from 42 per cent to 75 per cent of those polled.6 Thus at the very last minute (two days before the Report was due to be published) the cabinet suddenly reversed its stance: realising the value of the Report as a wartime propaganda weapon, Brendan Bracken set in motion the huge machinery of the government's information service. The Beveridge Report was thus given the widest possible publicity.7 A large press conference was set up for Beveridge; staff of the Ministry of Information (who tended to be sympathetic) put all their efforts into publicising it; and the BBC broadcast summaries of it in twenty-two languages. When the Report was published, on 1 December 1942, it became a best-seller. By the following midday, 70,000 copies had been sold; and public reaction was ecstatic. With his Bunyanesque language and the vivid, appealing imagery of the 'Five Giants', Beveridge had produced exactly what a war-weary public wanted. In the second week following the Report's publication the British Institute of Public Opinion found that fully 94 per cent of the public had heard of the Report; however, only 53 per cent believed that it would be put into operation.8 There was, therefore, something of a contradictory public response to the appearance of the Beveridge Report: on the one hand, a euphoric and rather uncritical adulation of all things Beveridge; on the other, 3 4 5 6

7 8

Pelling, Britain and the Second World War, p. 170. WM 153(42), War Cabinet Meeting of 16 Nov. 1942, PRO CAB 65/28. WM 159(42), War Cabinet Meeting of 26 Nov. 1942, ibid. Ian McLaine, Ministry of Morale: Home Front Morale and the Ministry of Information in World War II (1979), inside cover. Paul Addison, The Road to 1945 (1975), pp. 215-17. British Institute of Public Opinion, The Beveridge Report and the Public (1942), PRO PREM 4/89(2) (Part II).

After the Beveridge Report, 1942-1948

387

some mistrust of the government's real intentions. Throughout 1942, there was a strong desire for a better Britain after the war - particularly one with improved social policies and low unemployment - coupled with a cynicism towards politicians and a real fear that such a new Britain would never actually materialise. This was the gist of an important memorandum sent by the Controller of Home Publicity to Brendan Bracken on 21 April 1942. The memorandum also noted that 'the main positive aspirations' of those interviewed were: an end to unemployment; adequate sickness and old age pensions for all; a levelling up of incomes, with higher minima and lower maxima; and an equal chance for all children.9 Where old age pensions were concerned, public opinion seems to have been hostile to Beveridge's parsimony. The British Institute of Public Opinion found that the greatest volume of public criticism was directed towards the proposed starting pension level of only 14s Od per week. The majority thought it should be 20s Od per week immediately, with a much quicker rate of increase to the 24s Od maximum pension.10 When attempting to evaluate public responses to the Beveridge proposals from written evidence, a number of problems present themselves. During the entire war there operated in Britain a massive and sophisticated government propaganda campaign. As a leading historian of the media, Philip Taylor, has observed, our received impressions of the Second World War are a product of ca British government whose control over the wartime media was near enough total and the object of admiration from no less a figure than Joseph Goebbels himself. The Ministry of Information (Mol) was enormously powerful: 'no newspaper article, radio broadcast or clip of film was allowed to reach the public unless the British government, operating through the Mol, allowed it to do so', notes Taylor. For example, the vast majority of the twenty to thirty million weekly cinema-goers were blissfully unaware of the extent to which the images before them were subject to the tightest of censorship.11 We should thus be wary of assuming that what was published, transmitted by the media or left to posterity necessarily reflects 'public opinion' - an elusive and slippery concept at the best of times. Censorship, patriotism, the social confusion of wartime, the disruptive effect of military call-up, plus numerous practical factors (such as the paper 9

10 11

Michael Balfour, Propaganda in War 1939—1945: Organisation, Policies and Publics in Britain and Germany (1979), p. 295. Beveridge Report and the Public. Philip M. Taylor, 'Film, the Historian and the Second World War', in Philip M. Taylor (ed), Britain and the Cinema in the Second World War (1988), pp. 2 - 3 , 7.

388

The 'Beveridge revolution'

shortages) created a society in which dissident views found little outlet. After Labour and Liberal leaders joined the Churchill wartime coalition, political criticism was muted, not only inside parliament but also in public life generally. All these factors meant that the Beveridge Report was born into a very peculiar political atmosphere. When it comes to selecting 'representative' indicators of public opinion on the Beveridge Report, we should perhaps turn to that organisation which (as already noted) managed to collect a petition of five million signatures and present it to parliament in July 1939, following this up with another one of four million signatures in November 1943 - the National Federation of Old Age Pensions Associations. Where the maintenance of a wartime political consensus was concerned, the Federation was an awkward loose cannon. Its reaction to the Report was one of fury. 'For all practical purposes the Beveridge Report is useless', commented The Pensioner, arguing that: 'we had better ignore it entirely, concentrating on action which will secure our just rights - AND NOW - not at some vague future time when present day pensioners will all be dead . . . We shall completely disregard the Beveridge Report, which offers present day pensioners nothing.' The proposed pension level and the long, twenty-year buildup to full subsistence pensions meant that 'it is obviously not a new world we are heading for, but merely a patched-up old one'. The Pensioner deplored all the 'screaming headlines' applauding the Report, arguing that these must have been invented by people who either had not read the Report properly or were acting under government instructions. 12 With an increasing air of desperation, and realising that they were being outmanoeuvred, the National Federation's leaders began a campaign of protest against the Beveridge pension proposals. By now, the Federation was demanding 30s Od per week for all at the age of 60, funded entirely out of taxation. H. W. Tyrrell, its general secretary, wrote to every MP and the Federation campaigned as best it could in parliamentary by-elections. But in the peculiar political atmosphere of wartime - especially now that the Labour Party had been incorporated into government - this was a difficult task. There was some alarm in Whitehall that a leading voice in the Commons against the Beveridge Report was J. J. Tinker, the veteran pensions campaigner. Sir George Epps, the Government Actuary, warned that the Federation's demand of 30s Od per week for all at 60 would cost £500,000,000 at the outset and nearly £675,000,000 by 1965, and this would be a total Treasury 12

The Pensioner, Jan. 1943 and Feb. 1943.

After the Beveridge Report, 1942-1948

389

charge. By contrast, the Beveridge plan had kept anticipated pension costs down to £165,000,000 in 1945 (of which £50,000,000 would be found by the Treasury), and £325,000,000 in 1965 (£210,000,000 from the Treasury).13 But civil servants were confident that they had beaten off the Federation's challenge. One Treasury official dismissed the demand for 30s Od per week pensions as 'fantastic . . . acceptable to only a very small minority of MPs', but Edward Hale warned that the Federation was 'by no means negligible politically, whatever else may be thought of them'; it had 'a considerable membership in parts of the country' and 'some electoral importance'.14 Hale had always been awake to the potential power of the Federation. The distancing process was very evident when the Federation asked to send a deputation to Sir William Jowitt, Minister for Reconstruction, about the 1944 White Paper's pension proposals. In spite of its claim to have a membership of 1,500,000 old age pensioners spread over 750 branches, and strong public support, the Federation's request was initially refused, on the grounds that Jowitt was 'by this time well acquainted with the views of both sides'. 15 Eventually, in December 1944, Jowitt agreed to see a deputation. The full panoply of expedient social insurance arguments were used by Jowitt to justify the proposed pension levels: all benefit rates were dictated by contributions, and the latter were the highest that working people could afford; the new retirement pensions did 'not purport to be at the subsistence level'; there had to be room for personal savings; supplementation by National Assistance would merely be 'in the background'. A second deputation, on 19 January 1945, received a polite hearing from Jowitt, but no concessions on pension levels. 16 In November 1943, the National Federation petitioned parliament; a meeting was held in the Commons, at which over 100 MPs attended. On a technicality (incorrect form of wording), the petition - in beautiful copperplate script - was ruled out of order by the Speaker. As a last resort, the petition was submitted to the King. It was unsuccessful.

13

14

15 16

Memo by G. W. S. Epps, 'Mr Tinker's Motion', 12 Feb. 1943, PRO T 161/1164 (S.48497/2). Memo by G. M. J., 'Old Age Pensions', 22 Feb. 1944; Memo by Hale, 'Old Age Pensioners' Petition', 29 Feb. 1944; Hale to Hopkins, 31 Oct. 1942, PRO T 161/1167 (S.51952). H. A. Stavely to H. W. Tyrrell, 9 Nov. 1944, PRO PIN 8/70. Memo, 'National Federation of Old Age Pensions Associations. Notes on Points for Discussion', Dec. 1944; Memo, 'Deputation from the National Federation of Old Age Pensions Associations', 19 Jan. 1945; both in PRO PEST 8/70.

390

The 'Beveridge revolution'

The progress of pensions, 1943-1946 Immediately after publication, the Beveridge Report was scrutinised by an official committee of civil servants under Sir Thomas Phillips, Permanent Secretary at the Ministry of Labour. As is well known, the Phillips Committee's verdict was cool. In the minutes of its proceedings, one can see clearly the extent of mandarin resentment at Beveridge's modus operand^ as well as Treasury concerns over cost. The Phillips Committee was generally supportive of the retirement condition as an economy device, but doubted that it would really encourage individuals to continue in work. The sardonic but accurate comment was made that it was 'curious that the retirement condition, originally put forward as an incentive to retirement, should now appear in the guise of an encouragement to continue working'; the monetary inducements to postpone retirement would be too low to have any effect. The Committee supported Beveridge's low pension level: it saw no grounds for setting this at the same rate as unemployment benefit.17 Interestingly, the Committee's report shared the view of the Treasury 'old guard' that the concept of subsistence contained too many political dangers to be safely used as a legitimating device. Benefit levels should instead be 'a matter of judgement rather than of principle'; hence the pension rate should be based 'not on subsistence but on the measure of the help which the community felt able to afford, partly in contributions and partly in taxation'.18 In reality, of course, this was precisely the basis of Beveridge's 'subsistence' standard. In January and February 1943, the Treasury conducted a campaign of some veiled hostility towards the Beveridge proposals, with the Chancellor of the Exchequer, Sir Kingsley Wood, repeatedly stressing the uncertainty of Britain's long-term financial commitments.19 However, an abrupt change in pensions policy took place when the War Cabinet Committee on Reconstruction Priorities considered the Beveridge proposals. The key player was Ernest Bevin who, as we have seen, was a long-standing campaigner for better pensions. At the Committee's meeting of 5 February 1943, Bevin insisted that the full rates of pension must be paid immediately, and the extra cost of this paid for out of higher contributions. Faced with Bevin's determination, the other cabinet ministers seem to have fallen meekly into line. At a stroke, 17

18 19

Official Committee on the Beveridge Report, CBR Second Meeting, 18 Dec. 1942, and Fifth Meeting, 29 Dec. 1942, PRO PIN 8/115. Report, 'Official Committee on the Beveridge Report', Dec. 1942, ibid. War Cabinet Committee on Reconstruction Problems, 'The Financial Aspects of the Social Security Plan. Memorandum by the Chancellor of the Exchequer', 1 Jan. 1943, PRO CAB 123/45.

After the Beveridge Report, 1942-1948

391

Beveridge was over-ruled, and a pension level only some 20 per cent below what the National Federation had been demanding was agreed upon. Interestingly, it took a committee of experienced politicians to spot instantly the political impracticability of Beveridge's twenty-year transitional arrangements: they were unanimous in their view that public opinion simply would not tolerate it. (This decision confirmed the Treasury's view that, in terms of the realpolitik of democracy, the 'golden staircase' 'was always clearly a non-starter', as Bernard Gilbert put it.) 20 In the course of the stormy Commons debate on the Beveridge Report, on 16, 17 and 18 February 1943, the transitional arrangements towards full pension entitlement were formally abandoned, as was the notional commitment to the subsistence principle. Sir John Anderson said that there would always be 'room for much argument as to what in practice does constitute minimum subsistence', and warned that to accept the subsistence principle would imply that governments in future would have to adjust benefits up or down in line with fluctuations in the cost of living. Once again, the insurance principle came to the rescue: a commitment to maintaining the real value of benefits at subsistence would be impracticable 'in a scheme where benefit is intended to bear a close relation to contributions'. However, Anderson hinted that pension levels would be higher than the rates set out in the Beveridge Report, and this was followed up by a more robust promise from Herbert Morrison. Winding up for the government - and attempting to salvage an embarrassing political situation - Morrison pointed out that, out of twenty-three suggested changes in the Report, the government had rejected only one, and had left six open for further consideration. He assured MPs that the full pension rates would be implemented from the start, but the precisefigureswere as yet 'not settled'.21 Thereafter, civil servants and ministers ironed out the administrative problems, in preparation for the eventual publication of a White Paper on Social Insurance. In the case of pensions, the issues that were decided were: the precise level of the pension; the eligibility criteria, in respect of contributions paid; the treatment of married women; and the implementation of the retirement condition. The question of pension levels centred not so much on their amounts as on how they should be justified. As we have seen, Beveridge chose to deploy the concept of 'subsistence' as a useful way of winning public 20

21

Memo by Gilbert, 'Beveridge - Rates of Benefit', 18 Oct. 1943, PRO T 161/1164 (S.48497/2). HofCDeb.y 5s, vol. CCCLXXXVI, 16 Feb. 1943, cols. 1669-72, and 18 Feb. 1943, col. 2042.

392

The 'Beveridge revolution'

and political acceptance for his plan. He did this because pressure for subsistence benefits had been building up strongly throughout the 1930s, and by 1942 had become irresistible. Beveridge thus had no choice but to be seen to capitulate. However, Beveridge's benefit levels were in reality based upon two criteria: first, the dominant consideration of less eligibility - that they should be pitched at a level below low wages; second, that there was a finite, 'acceptable' amount of public expenditure available for social security. Treasury pressures in the summer of 1942 caused him to abandon the principle of immediate subsistence benefits in the case of pensioners. They emerged as the losers in the shrinking of the envisaged social security budget. In the aftermath of the Beveridge Report, there remained the question of whether subsistence should be the justifying principle behind the proposed new benefit levels. In a sense, it was a non-issue: in spite of the thousands of scientific papers that had been published in the 1930s on the question of nutritional minima, 'subsistence' remained an elusive, chimerical concept, open to many interpretations. Indeed, this was precisely why Beveridge had been able to use it so successfully as one of the legitimating principles of his plan. However, the concept of subsistence was a double-edged sword, politically speaking. While its notionally scientific basis could win public acceptance for benefit levels that were no higher, relative to wages, than equivalent benefit levels had been in the 1930s, subsistence also carried dangers in that it could encourage demands for higher benefits if nutritional experts raised their estimates of social minima. For example, Keynes thought it dangerous that Beveridge was 'being dragged at the heels of the subsistence experts': to be too explicit about 'subsistence' could open the way to further demands.22 Hence, as we have seen, the Treasury was always loath to endorse the tactic of justifying benefits by a proclamation that 'subsistence' had arrived; and the Phillips Committee rejected the subsistence principle outright. Within government, however, there then ensued a minor debate on the question. Beveridge's allies came to his defence. D. N. Chester explained Beveridge's predicament with brutal clarity. Beveridge, he said, 'had to steer a course between two extremes' - between those who argued that only a small increase in benefits was needed, and those who 'suggested very large increases, involving as much as £3 to £4 per week for a man and wife'. (As on other occasions, Chester had the threat of the National Federation of Old Age Pensions Associations in the 22

Memo by Keynes to Hopkins, 'Sir William Beveridge's Proposal', 13 Oct. 1942, in Donald Moggridge (ed.), The Collected Writings of John Maynard Keynes, vol. XXVII, Activities 1940-1946 (1980), p. 247.

After the Beveridge Report, 1942-1948

393

forefront of his mind.) Revealingly, Chester argued that 'as soon as one departs from a clearly nominal sum such as, for example, the present 10s Od old age pension, it is necessary to find some more defensible basis for present benefit rates'. Such a 'defensible basis' was found in the scientism of Rowntree, Bowley and Beveridge's Subsistence Sub-Committee. Chester warned that: 'An outright refusal to accept a subsistence basis or an attempt to cast doubts on the validity of the calculations in the Report (as is done by the Official [Phillips] Committee) might make it difficult to withstand demands for higher levels of benefits.' Chester criticised the Phillips Committee for abandoning the subsistence principle, yet endorsing benefit levels that were only slightly lower than Beveridge's: 'It is extremely doubtful whether the small gain is worth the loss of the advantages of the subsistence basis', he warned.23 Likewise, Lionel Robbins argued that it was politically valuable to tie benefit levels 'to some more or less objectively ascertainable figure'. In the near future, there would be demands for benefit levels higher than those suggested by Beveridge: 'If this is so', warned Robbins, 'is it not sacrificing a valuable sheet anchor to accept the Beveridge figures without accepting the Beveridge principle?'24 Some civil servants also thought the concept useful. For example, one argued that it would justify the couple's rate being less than double the single rate, on the grounds that, in a two-person household, there were economies of scale.25 However, the Treasury's view was that the political disadvantages of subsistence outweighed the advantages. A commitment to subsistence was too politically hazardous, in view of the economic uncertainties of the post-war world. The better protective wall was the contributory principle: in a flat-rate 'egalitarian' scheme, benefits could be held down to the level that the lowest wage earner could afford in weekly contributions. Accordingly, this was the view that prevailed in the 1944 White Paper on Social Insurance. From the very beginning, the White Paper voiced, in heavily coded language, those political fears that had impelled the Treasury ever since 1908. The insurance principle was an essential defence against 'irresponsible' demands for tax-funded benefits, and thus had to be seen by the public to be working efficiently. 'The stability of a vast scheme of this kind depends upon strict administrative economy in every sense', warned the White Paper: 'Indeed, any laxity in the organisation of the unified system or in the administration of benefits 23

24 25

M e m o by D . N . Chester, 'Official Committee on Beveridge Report', 21 Jan. 1 9 4 3 , P R O C A B 123/45. M e m o by Lionel Robbins to Lord President, 'Social Security Plan', 8 Feb. 1 9 4 3 , ibid. I. W. Dick to M r Rowbotham, 3 0 Mar. 1 9 4 3 , P R O P I N 8/117.

394

The 'Beveridge revolution'

would threaten the long-term continuance of the scheme by laying it open to legitimate and damaging public criticism.' Deploying the fashionable wartime rhetoric of citizenship, the White Paper then made a plea for popular support: 'economical administration' was not a matter for the government alone; it required 'the full cooperation of the public. All pay into the fund; all must be its custodians'. In an intriguing sentence, simultaneously authoritarian and moralistic, the White Paper declared: cIt is for the government to organise the provision of benefits; the citizen too has a part to play to see that they are not misused.'26 Subsistence as a justifying principle was rejected. To make a formal commitment to peg benefits at subsistence might involve frequent variations of benefit rates in accordance with changes in the cost of living. The circumstances of individuals varied greatly: it was not possible in a flat-rate insurance scheme to make these adjustments to individual need. The morality of the contributory principle was evoked as afinalconclusive argument: Benefits must be paid for, and a high level of benefit must mean a high level of contribution. The government therefore conclude that the right objective is a rate of benefit which provides a reasonable insurance against want and at the same time takes account of the maximum contribution which the great body of contributors can be properly asked to bear.27 The new pension was to be 20s Od (single) and 35s Od (couple) - lower than unemployment benefit (24s Od and 40s Od), and lower than Bevin had envisaged, but considerably higher than the final levels in the Beveridge Report. The established eligibility ages of 60 (women) and 65 (men) were retained. The retirement condition was to be introduced, with reductions in the pension if more than 20s Od per week was earned during retirement. The married couple's joint pension was to be paid when the husband qualified, provided that the wife was not working. Postponement of retirement would add increments to the pension in respect of each year of postponement. Pension expenditure for 1945 was predicted to rise by £63,000,000, or 35 per cent, from £177,000,000 (under the existing scheme) to £240,000,000 (under the new), whereas Beveridge's slimmed-down scheme would have cost only £194,000,000. When the White Paper was debated in parliament, on 2 and 3 November 1944, the Minister for Reconstruction, Sir William Jowitt, was careful to stress the inherent limitations of contributory insurance. He acknowledged that there had been criticism of the government for its 'refusal to adopt what is called the subsistence level'. But the scheme 26

Social Insurance, Parti, Cmd. 6550, 1944, p. 5.

27

Ibid.

After the Beveridge Report, 1942-1948

395

was a social insurance one 'which involves premiums which we hope all should be able to pay, in return for which benefits are to be received which we hope will at least take the edge off the mishaps of life. It is not and does not pretend to be a scheme of social security.'28 Jowitt's warnings about the elasticity of the concept of subsistence were followed by a long debate on all aspects of the White Paper. During this debate, Beveridge (in his brief career as Liberal MP for Berwick-upon-Tweed) made a well-received maiden speech, and mildly chastised the government for setting benefits a little way below subsistence.29 Within Whitehall, Beveridge's allies again felt some irritation that the White Paper now contained proposals which, had Beveridge made them, would have been dismissed by the Treasury as financial moonshine. Keynes and Chester felt that the strict discipline of the contributory principle had been relaxed too far in the case of pensions, in order that middle-aged entrants could be admitted immediately.30 After reading a draft of the White Paper, in May 1944, Chester thought that its section on pensions was weak, and should be re-written 'by reason of the strong lobbying power of the old age pensions movement'. Reflecting the political concerns that were always uppermost in the minds of Whitehall planners at this stage, Chester argued that too many concessions had been made to the pensioners' lobby. Raising the married couple's rate to 40s Od (politically attractive, because it was double the single rate) would only cost a net additional £4,000,000 (after contribution income and savings on assistance payments). If the pensioners' lobby discovered this, it would be difficult to prevent such a rise. Chester warned: 'The advocates of a straightforward pensions scheme financed out of taxation . . . will find material here for further attacks on the contributory system.'31 There were indeed such attacks in 1944-5. Despite their being outmanoeuvred and marginalised over the course of the war, the National Federation of Old Age Pensions Associations managed to mount a last-ditch campaign in pursuit of their aim of 30s Od per week for each pensioner (regardless of marital status) at the age of 60, taxfunded, with no means tests, 'as a just right and reward for services rendered in producing the wealth of the country'.32 The White Paper was thus 'a big disappointment to the old folks', and it had taken a suspiciously long time to come to publication. 'We refuse, therefore, to 28 29 30 31 32

HofCDeb., 5s, vol. CDIV, 2 Nov. 1944, cols. 9 8 3 - 4 . Ibid., 3 Nov. 1944, cols. 1 1 2 7 - 8 . Keynes to Gilbert and Hopkins, 15 May 1944, PRO T 161/1165 (S.484973). Memo by Chester, 'Old Age Pensions', 13 May 1944, ibid. Thomas Halliday (NFOAPA) to the Chancellor, 26 Oct. 1944, PRO PIN 8/64.

396

The 'Beveridge revolution'

be drawn into the maelstrom of delirious acceptance5, declared The Pensioner.33

Pressure was exerted by the National Federation on Sir William Jowitt, via protests, deputations, rallies and questions in the House from sympathetic MPs. For example, The Pensioner argued in early 1945 that its own studies of the budgets of the retired showed that, for them, 'subsistence' was an average of £1 14s 7d (single) and £2 13s Id (couple). But the formal abandonment of the subsistence principle and the shift to contributory funding meant that such arguments could be easily countered. As has been shown in the previous section, the National Federation's lobbying of Jowitt in 1944-5 resulted in little more than ritualistic posturing by both sides. Other deputations were received from women's organisations. The relatively small feminist movement of the 1940s had raised objections to Beveridge's proposals. Elizabeth Abbott and Katherine Bompas's The Woman Citizen and Social Security (1943) criticised the unequal retirement ages, wishing men's to be lowered to 60, and objected to the fact that the married woman's pension rights were by virtue of her husband's contributions - thus reinforcing the patriarchal power relations endemic in Beveridge's 'male breadwinner' model (which, in turn, reflected the pre-war low labour force participation rates of married women). They sought insurance cover for married women not employed in the labour market, including entitlement to a retirement pension in their own right.34 Their views were presented by a deputation from twelve women's societies to Sir William Jowitt on 25 February 1944 (led by the National Council of Women, and including Elizabeth Abbott). The demand for equal retirement ages was dropped, but the deputation argued the case for married women having independent insurance status. Although the Beveridge Report had purported to view the married couple as a 'team', 'the wife was in fact treated as a dependant', and this was out of line with 'modern practice and feeling on women's questions'.35 Likewise, Florence White and the National Spinsters' Pensions Association distancing themselves from organised feminists - continued their campaign for spinsters' pensions at age 55, sending deputations to Jowitt on 19 October and 5 December 1944, and 21 March 1945. 36 Once again, the insurance principle was used by Jowitt to maximum 33 34

35

36

The Pensioner, Oct. 1944. Elizabeth Abbott and Katherine Bompas, The Woman Citizen and Social Security (1943), pp. 5 , 8 , 1 9 . 'Note of Deputation from National Council of W o m e n and Other Organisations', 25 Feb. 1944, P R O P I N 8/48. Material in ibid.

After the Beveridge Report, 1942-1948

397

advantage. Married women could not be treated as independent citizens unless they paid regular weekly contributions, and with nine out of ten married women not in the labour force (in the most recent census of 1931) this was deemed impossible: contributory insurance could only grant benefit eligibility according to labour market status. Special pensions for middle-aged unmarried women were out of the question because it was impossible to identify in advance those women who would be spinsters at the age of 55 (as the Treasury had argued in the late 1930s). Though, as we have seen, the private language used by civil servants when dealing with the demands of organised women was coarse and replete with contempt, patriarchy was a secondary motive: such demands foundered on the rock of the insurance principle, which was first and foremost an instrument of economic containment. In July 1945 a Labour government was elected in Britain. This event undoubtedly ensured that certain of the social policies mooted in wartime - notably a universal, comprehensive and tax-funded National Health Service - would be delivered more or less intact to a grateful electorate. In the case of social security, the change of government was probably less important. The new retirement pension scheme was born into the world as part of the 1946 National Insurance Act. In introducing the bill, Labour's Minister of National Insurance, James Griffiths, followed seamlessly on from Jowitt on the question of subsistence. He emphasised the problems intrinsic to the concept, but argued that Labour's proposed benefit levels were in line with Beveridge's calculations (adjusted for increases in the cost of living): this gave figures of 26s Od (single) and 42s Od (couple). In a passage famous for its diplomatic woolliness, Griffiths justified the end result: £I believe that we have in this way, endeavoured to give a broad subsistence basis to the leading rates, within the framework of a contributory insurance scheme.'37 Much of the Beveridge logic was reiterated - such as the warning that future population trends made it imperative to induce older workers to postpone retirement - but a major difference was that retirees were to get the full rate immediately. Thus in 1946 there commenced in Britain a new, universal pension scheme providing 26s Od (single) and 42s Od (couple). In 1948, it was underpinned by the new National Assistance system. The retirement condition was introduced, but only for the first five years; once a citizen reached the age of 70, he or she was deemed to be retired, regardless of employment status. After all the privations of the war years, it was 37

HofCDeb., 5s, vol. CDXVIII, 6 Feb. 1946, col. 1742.

398

The 'Beveridge revolution'

understandable that the prevailing mood in parliament was one of collective achievement and self-congratulation, and that, as a result, many of the ironies in the evolution of state pensions over the previous decades went unremarked. Perhaps the greatest irony of all was that an idea which had started its viable public life in the cosy, book-lined study of a conservative rural vicar some seventy years before had ended up - in a very different form - being implemented by the most radical Labour government of the twentieth century. After 1948 Seventy years after Canon Blackley published his scheme, there came into existence a dual state pension scheme: at the top, the flat-rate National Insurance pension; below this, and underpinning it, meanstested National Assistance (which was being claimed by 27 per cent of pensioner householders in 1954). Though at a more generous level than Beveridge had proposed (and representing a real increase on pre-war pension levels), this two-tier scheme reflected in part the Treasury's desire to keep the universal pension low and meet the needs of the poorest pensioners by means-tested supplements. In effect, it was the cheapest combination of the 1925 and 1908 principles. The contributory principle continued to enjoy a totemic significance not warranted by funding realities. The British public displayed a cheerful willingness to view the pension scheme as 'risk-pooling', contributory insurance - perhaps because they appreciated the greater contractual rights thus conferred, and the absence of means-testing but it was in reality 'pay-as-you-go'. As the Government Actuary admitted in 1953, 'probably only 5 per cent of the current expenditure on retirement pensions may be said to be covered by the payment of insurance contributions in the past'. 38 Thus the Treasury had largely succeeded in setting up a tax-funded scheme, based upon a flat-rate poll tax, which possessed all the political advantages of a contributory system with none of the economic disadvantages. Given that retirement was a consequence of a long-run decline in the demand for the labour of older males, the effect of the retirement condition on the rate of retirement was marginal, and certainly not in the direction that Beveridge had hoped. In any case, both the earnings disregard and the level of annual pension increment for postponed

38

Third Interim Report of the Government Actuary for the Year Ended 31st March 1952

(1953), p. 12.

After the Beveridge Report, 1942-1948

399 39

retirement were too low to encourage continuance at work. Retirement spread at roughly the same rate after 1946 as before - in other words, independent of any attempts to tinker with it via policy. Social observers were somewhat puzzled by the fact that the labour force participation rates of older males continued to fall, despite full employment, and there were somewhat inconclusive suggestions that the minimum retirement age be raised.40 As in the 1930s and 1940s, concerns over the fiscal consequences of an ageing population were regularly expressed (notably, in the 1954 Phillips Committee Report On the Economic and Financial Problems of the Provision for Old Age). The principal change in the retirement pension was the addition of earnings-related supplements. First suggested by the Labour Party, in its policy document National Superannuation (1957), and introduced (for some contributors) by the Conservatives' National Insurance Act of 1959, the principle was extended considerably by the State Earnings Related Pension Scheme in 1975 - only to be cut back (and nearly abolished) in the 1980s. By the 1980s and 1990s, continued downward pressure on public expenditure, against a background of long-term economic recession, was placing the state pensions system under considerable scrutiny. 39

40

Sarah Harper and Pat Thane, 'The Consolidation of 'Old Age' as a Phase of life, 1945-1965', in Margot Jefferys (ed.), Growing Old in the Twentieth Century (1989), p. 47. See, for example, B. E. Shenfield, Social Policies for Old Age (1957), chs. 2 and 3; V. George, Social Security: Beveridge and After (1968), p. 151.

17

Conclusion

The story recounted in the preceding pages has had to be lengthy and detailed, for the emergence of a 'politics of retirement' was complex. Nevertheless, several analytical themes can be picked out and presented in conclusion. The spread of modern 'jobless' retirement and the accompanying campaign for state old age pensions belonged to that period of 'organised' capitalism which began in the last quarter of the nineteenth century and was characterised by the dominance of mass production in large-scale manufacturing enterprises, relative job security for working people, the growth of 'scientific' management in the workplace (in which mandatory retirement played an important part), clear political distinctions between 'left' and 'right' or 'labour' and 'capital', Keynesian welfare states located within nation states, and so on.1 This period thus saw the emergence of old age as a social 'problem' - increasingly scrutinised by social investigators, economists, demographers and gerontologists - and of the 'life-cycle' as a series of discrete periods.2 Changes in labour market demand were crucial, and accounts of retirement which prefer to emphasise supply-side, behavioural or rational choice models are deficient. Certainly, once demand-side factors began to operate, then human beings made 'choices' from the range of options available to them. Most notably, the trades unions campaigned hardest for an 'adequate' pension which would recognise the 'citizenship' worth of 'the veterans of industry' displaced from the labour market, and bestow upon them an 'honourable retirement'. But these choices were severely constrained by the economic realities that already existed, determined by labour market trends. This study began with the theme of 'capitalism versus mass democ1

2

A useful summary is to be found in Christopher Pierson, Beyond the Welfare State? (1991), p. 62. For an interesting discussion, see Mike Featherstone and Mike Hepworth, 'Ageing and Old Age: Reflections on the Postmodern Life Course', in Bill Bytheway, Teresa Keil, Patricia Allatt and Alan Bryman (eds.), Becoming and Being Old. Sociological Approaches to Later Life (1989), esp. pp. 152-4.

400

Conclusion

401

racy'. The politics of retirement provides a perfect example of the political dilemma posed by these potentially opposed forces. Early conservative campaigners for old age pensions (notably Joseph Chamberlain) were openly concerned about the future growth of workingclass political power, and did all they could to keep the pensions debate within the constraints of the fiscally conservative mechanism of contributory insurance. Likewise, the Charity Organisation Society hoped to remoralise the working class into a capitalist mentality before mass democracy arrived, and the desperation of its 'old guard' leaders over the pensions issue in the 1890s arose in part from their misguided and politically backward concern that time was running out. By the end of the 1890s, however, old age pensions had become a central demand of the emerging labour movement. State pensions threatened to become a huge item in public expenditure, massively redistributive from rich to poor. The challenge of the new democratic politics is evidenced by the fact that this confrontation was particularly intense in the period 1918-24, immediately after the achievement of virtual mass democracy. Pensions raised the more difficult - and vitally important - question of whether economic democracy could accompany the rather tame and ritualistic processes of competitive party democracy. Old age pensions thus had both 'conservative' and 'radical' origins: as with all state welfare, it was precisely this paradox that made the campaign so intriguing. For conservatives, pensions were necessary to assist the shake-out of older male labourers in the name of industrial efficiency, and impose new welfare discipline on the young, able-bodied male; their dilemma was how to fund a state scheme that would minimise redistribution from rich to poor. For radicals, pensions were to be part of a package of welfare policies for the casualties of capitalism, simultaneously placing a huge fiscal burden upon the wealthy and thereby breaking their power. However, by the 1920s the force of this radical threat had considerably diminished. The challenge posed by the steady displacement of older males from the labour force was mediated through the processes of an emerging competitive party democracy, and engendered lively political responses from a wide range of actors and interest groups. These responses were complex, being shaped by a variety of social identities - class, gender, age, locality, sectional consciousness, and so on. There was no single, monolithic 'politics of retirement', and this study has tried to analyse its highly diverse component parts. Yet ultimately human agents were powerless to influence labour market trends: this was most evident in the retirement pensions plans of the Labour government in 1929-30 and of Political and Economic Planning in the 1930s, both of which

402

Conclusion

were designed to speed up the rate of labour force disengagement. Both were frustrated by a political culture that deferred to economic market forces. Neville Chamberlain's late-1930s' critique of such plans - that they sought a reduction in unemployment almost exactly equivalent to the rate at which unemployment was falling anyway - was a devastating summation of this powerlessness. To argue this is emphatically not to argue for a crudely materialistic model of social change. Nor is it to dismiss the role of ideas in policy-making. It is instead to suggest that political choices and ideologies operated within a powerfully constraining economic context, and that cultural responses to the spread of retirement, while very important, were ultimately only ever responses. Despite these economic constraints, many creative ideas were forthcoming as alternatives to the pensions scheme that eventually emerged. Most notably, there were those in the 1920s (such as Hugh Dalton) who suggested a combination of tax and insurance funding that would have yielded a higher old age pension and kept many pensioners out of poverty. Yet these (and, of course, the more radical demands of the National Federation) were ruled out of order by the policy process. To be sure, Treasury power-brokers had a number of powerful arguments on their side. Some of these were convincing - notably, that the pensioner population was so income-diverse that an across-the-board increase in the basic state pension would be 'wasteful'. Other arguments (such as the low number of pensioners claiming public assistance in the 1930s) were empirically threadbare and were deployed opportunistically. This study has tried to unravel the full complexity of the retirement debate in the inter-war years, at considerable length. But ultimately when all this complexity has been analysed - the guiding principle of 'high policy-makers' was relatively simple: everything had to be done to minimise redistribution between social classes. If this appears in retrospect to be a crudely reductionist conclusion, this is only because it was the crude reductionism deployed at the time. Upon this principle hung the whole debate about pension costs. This study has deliberately not pronounced a verdict on the 'affordability' of different old age pension schemes. Nowhere have such subjective value judgements been made. Instead, it has sought to analyse the different positions on pensions as wealth and income redistribution, summarising the arguments that were articulated at the time. The objective reality in so far as such measurements can ever be accurate - was that, in the 1920s and 1930s, a small minority of income earners (between 10 per cent and 20 per cent, depending on estimates) took half of total national income, with the vast majority sharing (very unequally) the remaining half. On the far left were those like the National Federation of Old Age

Conclusion

403

Pensions Associations who believed that this income maldistribution showed that a much more generous, tax-funded pension scheme was 'affordable'. Further to the centre were those (notably Hugh Dalton in 1925) who believed that some combination of tax- and insurancefunded improvements was possible. In the political centre were those who genuinely believed that better pensions were needed, but who could not contemplate the required income redistribution: for them, the only practical and financially sound funding method was by higher contributions from working people (the perceived obstacle being that many such working people were too impoverished to pay higher contributions). To the right were those (the senior civil servants Frank Tribe and Bernard Gilbert being striking examples) who not only viewed such demands as very unsound, in terms of overall responsible fiscal management, but saw it as their duty to protect the stability of a society based upon such a maldistribution of income and wealth. Their primary aim was the efficient management of capitalism such that wealth would be generated, but only within existing structures of wealth ownership. They were also quite frank in their 'social capital' or 'reproduction of labour' arguments: public expenditure on pensions should have a low priority, not only because it threatened to bring about such radical redistribution, but also because it was wasteful to divert resources towards those citizens who had no future labour market value. Beveridge articulated such arguments quite explicitly, and they have dominated social debates on old age ever since: as one US demographer commented recently, 'whereas expenditure on the elderly can be thought of mainly as consumption, expenditure on the young is a combination of consumption and investment'.3 Such a view - clearly violating the idea of equality of citizenship through welfare - has also influenced some historical judgements: for example, Rodney Lowe comments that the post-war Labour government's decision to pay full pensions immediately 'made little economic sense because it would have been far more logical to invest in the future, rather than to reward the past, workforce'.4 The debate over state pensions funding was conducted in elliptical and often highly technical language (the waters being expertly muddied by the Government Actuary); but, ultimately, it was a debate over income redistribution between social classes and the 'social capital' value of different forms of welfare expenditure. In the politics of retirement, class self-identity was thus very impor3

4

Samuel Preston, quoted in Chris Phillipson, 'Intergenerational Conflict and the Welfare State: American and British Perspectives', in Alan Walker (ed.), The New Generational Contract: Intergenerational Relations, Old Age and Welfare (1996), p. 207. Rodney Lowe, The Welfare State in Britain Since 1945 (1993), p. 157.

404

Conclusion

tant. Though several influential social historians now argue that the concept of social class is, at best, an unhelpful one, it is clear that contemporaries saw things very differently. Radicals within the TUC and the early Labour Party viewed the issue in highly class-conscious terms. The most militant pressure group, the National Federation of Old Age Pensions Associations, was explicitly class-confrontational. At the other extreme, senior civil servants were also practitioners of class politics, seeing it as their paramount duty to defend the existing economic order. But the 'politics of retirement' was also highly gendered. In spite of the fact that women had always experienced higher rates of poverty in old age than did men (and were more likely to survive to be pensioners), the focus of debate was almost always on the plight of the 'worn-out' male industrial worker, whose labour market value was diminishing, and most of the campaigning groups were male-dominated. Industrial considerations were central to all pension debates, making the 'politics of retirement' highly masculinist in orientation. A real interpretative difficulty is contained in the question of how far this was a 'rational' reflection of economic imperatives (the labour force being preponderantly male), and how far it reflected a subconscious unwillingness on the part of male actors in the policy-making drama to acknowledge the needs of women. Was contributory insurance a device for containing wealth distribution, or was it designed to reinforce a 'male breadwinner' model of power relations: put crudely, class or patriarchy? In as much as the two can be separated, this study shows that it was more the former. Explicit expressions of patriarchy were rare. This does not, of course, discount its implicit power: gender was often powerful by its very absence in discussion - 'the dog that did not bark'.5 A significant change for women occurred with the transition to contributory pensions in 1925 and 1946, when their entitlement became based upon their husband's insurance contributions (the 1908 scheme having been completely gender-blind in operation).6 Yet with the exception of the National Spinsters' Pensions Association (and some campaigning by the National Union of Societies for Equal Citizenship on widows' pensions), women's groups were relatively silent on the pensions issue. During the Beveridge period, their protests were easily marginalised. The most powerful and important campaigning organisations were thus those based in the masculine world of organised labour. In short, 5 6

I am grateful to Professor Hilary Land for discussing this point with me. It should be borne in mind that the real fiscal losers from the 1925 Act were unmarried men, the largest part of whose contributions went to fund the benefits of other men's wives and widows.

Conclusion

405

the role of the labour movement was crucial. This study has little sympathy with certain histories of social policy which seek to write the British labour movement out of the story, even sometimes viewing the welfare state as a middle-class creation.7 But the role of the labour movement was paradoxical. On the one hand, grass-roots activists formed and ran those organisations that led the campaign for better pensions (the TUC, the Labour Party, the NCOAP, the NFOAPA). At the peaks of pensions agitation (1900-1908, 1918-24 and 1937-40) the labour movement was all-important, and this study has tried to rescue from historical oblivion its forgotten campaigners (such as the small band of Labour MPs in the House of Commons in the 1930s). Surprisingly, a key individual was Ernest Bevin, whose influence was enormously important at crucial points - the early 1930s, 1937-40, and in 1943, when at a stroke he squashed Beveridge's miserable 'golden staircase' to full pension rights. Indeed, where pensions are concerned Bevin's name perhaps deserves to be better remembered than does Beveridge's. Yet, on the other hand, the Parliamentary Labour Party acted as part of that very process of containment by which labour radicals were defeated. All the dilemmas inherent in capitalist social democracy particularly Labour's desire to behave 'responsibly' in matters of economic management - were strongly evident in the pensions saga. Four episodes particularly bear this out: Philip Snowden's loss of nerve in 1924; the failure of Labour's retirement pensions plan in 1929-30; the final acceptance of the contributory principle in 1937; and the abandonment of the National Federation in 1940-5. In the process of economic containment, the shift to contributory insurance funding was crucial. Ostensibly, social insurance brought the magic of averages to the rescue of millions, as Winston Churchill once put it. But since it based welfare eligibility upon labour market status, rather than upon citizenship, it discriminated harshly against women. Social insurance also enlisted the arcane mysteries of actuarial science in the service of class politics. Skilfully, the contributory principle was used to contain and thus outflank the challenge of universal, tax-funded pensions, which had promised to be highly redistributive from rich to poor. Initially - in the socially unrealistic and ultimately abortive plans of Blackley and Chamberlain - social insurance had come up against the impossibility of dealing with those who, in old age, needed pensions most: women and the low-paid. As one of the planners of the 1911 National Insurance Act observed, 'women are not an insurable propo7

For example, Douglas E. Ashford, The Emergence of the Welfare States (1986).

406

Conclusion 8

sition'. But from 1908 onwards, a concerted campaign was waged by the Treasury to shift pension funding on to a contributory basis, achieved in part in 1925 and in full in 1942-6. At two key points, the Treasury's campaign to alter the basis of funding was assisted by the introduction of clever political 'sweeteners'. In 1925, these were the lowering of the pensionable age from 70 to 65, the removal of meanstesting (or the 'penalty on thrift', as the labour movement saw it), the granting of full pension rights to those whose actuarial record in no way justified them, and the introduction of widows' and orphans' pensions (also a long-standing labour demand, first presented by the ILP in the mid-1890s). In 1942-6, these were the principle of universality and the placing of pensions in the attractive context of a comprehensive, 'cradle to grave' social security system that purported to offer 'subsistence' benefits to all - except, ironically, to old people themselves. Universality was originally a demand of labour radicals, who sought tax-funded 'adequate' pensions for all. In the 1940s, however, it was cleverly appropriated by Beveridge as a way of legitimating the shift to contributory funding. The debate between universality and selectivity is one of the longest-running shadow-boxing contests in the study of social policy, with liberals generally supporting the former, and conservatives the latter. Yet it is not the structure of welfare benefits that matters, but the degree of inequality in a society. A great test of any society's 'welfare' intentions is whether it is prepared to support its retired citizens, who have no future 'social capital' value. Whether this is done by universal or by selective benefits matters much less than the level of those benefits, the way in which claimants are treated and - most of all - the degree of economic inequality that pertains in that wider society. In contrast to welfare histories which view the establishment of social insurance as the result of free, collective decisions by citizens to fashion a 'risk-pooling' mutual insurance system,9 this study is somewhat more sceptical. Such a critical view is substantiated by the volumes of evidence offered up here to show that those with their hands on the levers of power - especially the senior Treasury officials - viewed social insurance primarily as an instrument of economic and political containment. Indeed, it is no exaggeration to say that this was the principal criterion by which they judged its success or failure. The vocabulary of their everyday discourse reflected this central concern, from the An8

9

W. J. Braithwaite, quoted in Richard Titmuss, 'A Commentary', in H. N. Bunbury (ed.), Lloyd George's Ambulance Wagon. Being the Memoirs of William J. Braithwaite 1911-1912 (1957), p. 54. See, for example, Peter Baldwin, The Politics of Social Solidarity. Class Bases of the European Welfare State 1875-1975 (1990), p. 29.

Conclusion

407

derson Committee's contempt towards the 'free' pension of 1908 to Beveridge's stern, unbending insistence that 'benefits must be paid for', and the moralistic strictures in the 1944 White Paper on Social Insurance. Of course, on the face of it contributory insurance offered a package of contractual rights to benefit that were important to recipients, and undoubtedly made the Beveridge scheme popular with the public at the time. The insurance principle was also keenly supported by the trade union movement after 1946 (after some soul-searching on the issue in the 1930s). In practice, though, contributory benefits have always proved vulnerable to political expediency, and contractual rights have been easily ignored by governments (for example, to the advantage of unemployment benefit claimants in the 1920s, but to their disadvantage in the 1930s and the 1980s). Again, the introduction of the retirement condition in 1946 was a flagrant violation of the insurance contract. The history of social policy has much to contribute to the understanding of present problems, and as Britain's state pension scheme lurched further and further into crisis in the 1990s, it is worth considering briefly some recurring dilemmas posed by different possible pension schemes, as revealed in history. First, a 'fully-funded' contributory scheme is one in which individuals receive back their 'own' money in retirement, with some cover for their dependants and a small element of 'risk-pooling'. But while such schemes may be attractive to conservatives, in that they minimise redistribution between classes and inculcate values of competitive individualism, they offer little or no cover for the low-paid or irregularly employed (including women). They are thus ineffective when much insecurity exists in the labour market, and lose political credibility. Such was the nature of the late nineteenth century labour market, and a similar level of insecurity may well exist in the twenty-first century as Britain moves into a 'post-industrial' economy. There is also the question of how individualised the right to a pension should be: should there be no risk-pooling at all? Should all surplus funds be returned to surviving relatives on the death of a pensioner (on the old insurance principle of'tontine')? If so, what length of survival in old age should be assumed? Finally, a strictly actuarial, fully funded scheme is politically unattractive, in that it only matures and pays benefits in forty to fifty years' time. Hence Canon Blackley's scheme offered no political advantage to any politician who might have taken it up; and, for all his rhetoric on fiscal morality, Neville Chamberlain had to grant full pension rights under his 1925 scheme to those who had in no way earned them. Contributory state schemes thus usually begin life with a large 'pay-as-

408

Conclusion

you-go' (PAYG) element, in the form of massive Exchequer subsidies, and may eventually end up as completely PAYG. A PAYG contributory scheme solves these political problems, but throws an economic burden on the young when the population is ageing (as was the case in the 1930s, and will be the case after the year 2021). It is also problematic to fund in times of recession when the tax base shrinks. In effect, it is a tax-funded scheme, but without the stigma of means-testing. There is also a possibility that PAYG funding may be seen by the public as tax-funding by another name: the value of the contributory principle as a weapon against 'irresponsible' radical campaigns for higher pensions is thereby destroyed, giving rise to demands that the scheme be tax-funded anyway. This was the great fear of the Treasury in the 1930s and 1940s. A tax-funded scheme is, arguably, politically most honest, and the most radical. But it presents three problems: first, it depends upon the willingness of citizens to support very obvious income redistribution on lines of class, age and gender; second, political realities usually require that it contains means-testing - which is stigmatising, penalises thrift, and can lead to 'moral hazard'; third, if introduced (in heavily means-tested form) as an alternative to an existing contributory scheme, there may result a 'pensioners' revolt' by all those who believe that they have a contractual right to their state pension by virtue of past contributions. Such a situation was looming up in Britain in the late 1990s. The retirement pension scheme that emerged in Britain between 1878 and 1948 attempted to steer a way between these dilemmas, at minimum cost to wealthier taxpayers. Hence although the 490,000 pensioners of January 1909 grew to over 10,000,000 by the 1990s, the cost of state pensions was always kept down: by the mid-1980s public pension expenditure in Britain as a share of gross domestic product was one of the lowest in the OECD countries.10 Central to this strategy was the contributory insurance principle. The underlying political and economic purpose of contributory insurance may be revealed by asking the simple counterfactual question, which implicitly runs through all the preceding pages: why was it deemed necessary to 'reform' the 1908 pension scheme? It could have been left largely intact, apart from a reduction in the severity of means-testing and a raising of the income limit for eligibility. Arguably, this would have bequeathed to the 1990s a 10

Alan Walker, 'Intergenerational Relations and the Provision of Welfare5, in Walker, New Generational Conflict, p. 17; Jorn Henrik Petersen, 'Problems of Pension Policy. American, British, Danish and German Ideas', Social Policy and Administration, vol. 25, no. 3, Sept. 1991, p. 251.

Conclusion

409

pension scheme funded in a more transparently honest way, providing a higher pension for the two-thirds of retired people who hover insecurely on the relative poverty level.11 This line of thought is especially ironic, given that, by the mid-1990s, many politicians - of all political parties - were arguing for just such a means-tested, selective state pension, targeting resources (in the form of a higher pension) at the majority of pensioners in real hardship. In 1980, the Thatcher administration switched the indexing of state pensions from earnings to prices, with the result that the relative value of the pension declined from 20 per cent of male average earnings in the late 1970s, to 15 per cent in the early 1990s (which, if continuing unchecked, was predicted to fall to 6 per cent by the year 2040). 12 As in 1925, a Conservative government had cleverly, and perhaps irreversibly, changed the agenda on pensions: after some fifteen years of it 'withering on the vine', few politicians were brave enough to contemplate the massive injection of public expenditure that would restore the pension to its late-1970s relative value. Many on the political right were arguing for an end to the universal, inadequate state pension based upon the contribution myth. The public debate on the issue was partly orchestrated (as in 1925) by the private pensions industry, which saw rich pickings to be had if the state pension was residualised and targeted at the very poorest. Demographic pessimism was resurrected, accompanied by a rather simplistic debate over 'generational equity'. Yet the growth of part-time or insecure, short-term jobs as part of the transition to a 'post-industrial' labour market, the continuance of high unemployment, the spread of male 'early' retirement down the age structure, and the likelihood of future high levels of divorce, were all calling into question the ability of private pensions to cover the needs of anything more than a predominantly male, wealthy minority of the population. Not surprisingly - in view of the story outlined in the previous pages - a new Labour government seemed to have caved in and accepted the prevailing orthodoxy that the state pension should be residualised, becoming little more than a safety-net underneath a new scheme of 'private pensions for all'.13 Ironically, it was those on the left who were now defending the National Insurance contributory principle against the policy of deliberate slow attrition.14 In short, by the 1990s the 'Beveridge legacy' on pensions was a new 'pensions dilemma' that 11

12 13 14

Interestingly, this point was argued by Arthur Seldon in The Great Pensions 'Swindle' (1970), p. 55. Paul Johnson, The Pensions Dilemma (1994). Frank Field and Matthew Owen, Private Pensions for All: Squaring the Circle (1993). See, for example, Peter Townsend and Alan Walker, The Future of Pensions: Revitalising National Insurance (1995).

410

Conclusion

urgently needed to be resolved. By waging a long campaign against the original 1908 pension scheme, in the name of class politics, the social policy-makers in the period 1908-48 had bequeathed many problems to their successors.

Index

Abbott, Elizabeth 396 Aberdare Commission on the Aged Poor (1893-5) 32, 36, 37, 41, 43, 48, 53, 148-50, 158, 170 and the Charity Organisation Society (COS) 108,110 and the friendly societies 120-1,132, 133 and Joseph Chamberlain 70, 74 Acts of Parliament Determination of Needs Act (1941) 344 Education Act (1870) 18, 66 Friendly Societies Act (1875) 114, 118, 122 Friendly Societies Act (1896) 115 Friendly Societies Act (1834) 122 Inebriates Act (1890) 157 Local Government Act (1894) 91, 102, 103 Medical Relief (Disqualification Removal) Act 102 National Insurance Act (1911) 120, 127, 135-6, 161-2, 191, 288, 337, 405-6 National Insurance Act (1946) 350-1, 397-8 National Insurance Act (1959) 399 Old Age Pensions Act (1908) 6, 10, 110, 111, 139, 155-63, 168, 192-3 and demographic concerns 260 eligibility clauses 156-62, 172, 173 and the friendly societies 120, 135-6, 137 and Neville Chamberlain's pension scheme 206, 214 and women 162, 201, 220, 221, 289 Old Age Pensions Act (1924) 196 Old Age Pensions Amending Act (1919) 179,181 Old Age and Widows' Pensions Act (1940)340-2,343-4 Poor Law Amendment Act (1834) 33-4, 42-3

ReformAct(1867)66 Reform Act (1884) 18, 66, 68, 102 Representation of the People Act (1918) 183,216 Widows', Orphans' and Old Age Contributory Pensions Act (1925) 140, 182, 187, 199, 206-16, 219-20, 223-4, 230, 307 anomalies 292, 293, 299-7 and ageing population 260 and Labour's Pensions Plan 301-2 and older workers 268 and PEP 250, 253 and spinsters 309, 310-11,313 Widows', Orphans' and Old Age Contributory Pensions Act (1929) 311,313 Workmen's Compensation Act (1897) 45, 47-8, 74, 143 Addison, Paul 349-50 age and agricultural labour 29 and applicants for outdoor relief 98 fixed age of retirement 5 of pension eligibility 155, 161, 163, 167, 175,201,300 and the Beveridge Report 365, 370 and the White Paper on Social Insurance (1944) 394 women 299-300, 311, 312-13, 315-16, 317, 318, 330, 333, 337, 339-40 and Poor Law dependency 39, 40 and poverty 275 stratifications in the labour market 54-7 structure of population 262, 263 ageing population 7-13, 15-16, 30, 399, 408 and the Beveridge Report 357 concerns over (1930s) 259-64 and Labour's Pensions Plan 306, 323-4 and pension expenditure 187, 300 and PEP 255

411

412

Index

agricultural labour 29, 50-1, 52 earnings 63, 189-90 pensions of workers 205 and the poverty line 277 agricultural workers, and unemployment insurance 253 Alexander, A. V. 241 'all-in' insurance planning 181-7, 188, 190-2,207,212 and the Beveridge Report 288 Amalgamated Society of Engineers 46, 128 Ancient Order of Foresters 113, 115, 116, 120, 124, 125, 133, 134, 135, 150 Anderson Committee (1923-4) 181, 187-93, 194, 198-9, 200-2, 204-5, 288, 406-7 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 208, 209-10, 211, 212, 213, 220 Anderson, Sir John 191, 193 annuity schemes eighteenth-century 27 and friendly societies 118, 120-1 Post Office 73, 74, 94, 149, 150-1 Ansell, Charles 121 Appleton, W. A. 171 Arch, Joseph 148 Ashton, T. S. 128 Asquith, H. H. 153, 154-5, 156-7, 157, 159,167,175,223 Attlee, Clement 303, 336, 345 Baker, Mrs H. Jennie 171, 178 Baldwin, Stanley 46-7, 184, 185, 190, 193, 200,201,202 and Neville Chamberlain's pension scheme 203, 206 Balfour, Arthur 41 Banfield, John 257 Barnes, George 46, 141, 145, 153, 154 Barnett, Canon Samuel 85, 97, 99, 101, 104-6, 109 Barrington, Russell 99 Bartley, George 32 Beechman, Nevil 328 Bevan, Aneurin 241, 306, 320, 345 Beveridge Committee (1942) 181, 220, 221, 264, 272, 287-90, 335, 344, 347-84 'Basic Problems' memorandum 358,

365,368,371 and the 'Beveridge consensus' 246 and the Churchill wartime government 385-8 and contributory insurance 289, 356, 381,384

cost constraints 368-71 and the diet of old people 280 and the 'golden staircase' 376, 391, 405 and Labour's Pensions Plan 301, 303, 305, 324 'Memorandum by the Government Actuary' 381-2 and the NFOAPA 319, 321, 346, 351-2, 364-5, 366, 367, 380, 383, 384, 388-9,391,392-3 and older workers 355, 359-60, 362-3, 369, 370 pension expenditure 381-2 pension rates 368, 375 pension values 382-3 and the progress of pensions (1943-1946)390-3 public response to report 386—8 and the retirement condition 355, 357-68, 371, 378, 380, 384 and subsistence pensions 353, 354, 355-7, 359, 368, 369, 371, 375-6, 378-9, 381, 384, 389, 391-3 and the Treasury 338, 363, 365-6, 371-82, 383, 388-9, 390, 391, 393 and the TUC 358-60, 363, 364, 366, 370, 378, 380 and universal pensions 353-4, 357, 368-9, 375, 384 and women 361, 370, 380, 383-4 Beveridge, Sir William 24, 337, 407 Insurance for All and Everything 288 and population concerns 260, 261 and the White Paper on Social Insurance (1944)395 Bevin, Ernest 228, 241, 242, 249, 281, 290, 296, 297, 347, 405 and Labour's Pensions Plan 301-2, 302, 303, 323 and the Treasury Enquiry (1939) 337 and the War Cabinet Committee on Reconstruction Priorities 390 on women and pension age 300 Bickham, W. H. 328 Birkenhead, Lord 218 birth-rates and ageing population 7, 259, 260 and friendly societies 120 nineteenth-century fall in 18 and population forecasting 263-4 Birtles, James C. 319, 365 Blackley, Canon William 10, 16, 27, 30, 41, 60-5, 76, 143, 398, 405, 407 background 60 and the Charity Organisation Society (COS) 93

Index and the friendly societies 131-2 old age pension scheme 61-5, 78, 83 and the Select Committee on National Provident Insurance 147-8 Blanesburgh Committee on unemployment insurance (1927) 228 Blunden, P. Y. 360 Boer War (1899-1902) 74, 75, 142, 146, 147, 153 Bompass, Katherine 396 Booth, Charles 24, 31, 76-84, 101, 138, 143 The Aged Poor in England and Wales 37, 48-53, 76, 79, 82, 88-9 and the Aberdare Commission (1893-5) 148, 149 background 76 and the Charity Organisation Society (COS) 88-9, 93, 104, 107, 108 and the friendly societies 131, 133 Life and Labour of the People in London 48, 53-8 and the NCOL 145, 146 on old age pauperism 39, 81-2, 174 Old Age Pensions and the Aged Poor 145 on the older male worker 48-59, 129 pension proposal 70-1, 72, 77-9, 82-4, 147, 157 and the Poor Law 34, 35, 36, 41-2, 44, 49-50, 79-82, 83 poverty investigations 76-7, 276, 278 Boothby, Robert 233-4 Bosanquet, Bernard 87, 89, 107 Bosanquet, Helen 59, 86, 87, 90, 94, 95-6, 106,110-11 Bourne, Robert 311 Bowley, A. L., poverty surveys 274, 276, 280,281,284 Brabrook, Sir Edward 115, 117, 121, 123, 124, 128, 129, 130, 133, 150, 152 Bracken, Brendan 385, 386, 387 Braithwaite, W. J. 170 Brand, H. F. 337 British Employers' Confederation 365 Broad, Thomas Tucker 188-9 Broadhurst, Henry 108, 148, 149 Brown, Ernest 348, 350 Brown, John 158 Browning Hall Conference (1898) 134,145 budgets of pensioners 176-7 Bunbury, Sir Henry 246 Bunning, G. H. Stuart 176 Burns, John 70, 153, 154, 155 Burt, Thomas 153, 154 Cadbury, George 146

413 Calverly, Mary 107-8 Campbell-Bannerman, Sir Henry 154 capitalism and the contributory pensions principle 208-9 and Labour's Pensions Plan 305 and mass democracy 3-4, 5, 400-10 and PEP 245, 248 Caradog Jones, David 24, 56, 249, 267, 277, 280, 282 Merseyside survey 269, 270-2, 275, 276, 284 Carr-Saunders, Professor A. M. 246, 260, 261 Castle Eden Friendly Society 118 Chadwick, Edwin 34 Chalmers, Thomas 86 Chamberlain, Austen 156, 203 Chamberlain, Joseph 21, 64, 65-75, 138, 142,143,146,147,401 and the Aberdare Commission (1893—5) 148, 149, 150 background 65-6 and the Charity Organisation Society (COS) 93-4, 103-4, 107-8 and the friendly societies 132-3 and Neville Chamberlain 202, 203 old age pension scheme 69-75, 78, 83, 217 and the Poor Law 41, 43 'radical programme' speeches 68-9 and the Rothschild Committee 151 and tariff reform 153 Chamberlain, Neville 183, 202-13, 402, 407 and the Anderson Committee 188 background 202-3 and contributory pensions 26, 194, 204-6,221,297,327 and Grierson's pension proposal (1935) 257-8 and Labour's Pensions Plan 304, 306 and Mosley 235 National government 287, 288, 331 and 'New Conservatism' 184 and retirement condition 358 and the Treasury Enquiry (1939) 332, 335,336 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 206-13,215,223-4 Chambers, Sir Theodore G. 169, 178 and the Poor Law Boards of Guardians 218-19 Chaplin Committee (1899) 75, 110, 145, 146, 151-2, 155, 158

414

Index

Chaplin, Henry 74 Chapman, Alfred 150 Charity Organisation Society (COS) 85-111,148,401 and Booth 79 and Canon Barnett 105-6 and the crisis over pensions 101-6 and the 'deserving' poor 100-1 ideology 87-92 and old age pensions 10, 38, 90, 92-4, 143, 229 campaign against 106-11 empirical case against 94-101 and old age poverty 71 origins 85-6 and pauperism 87, 93, 94-9 and the Poor Law 35, 41, 86, 87, 88, 90-2, 95, 96-9, 101-4, 108-9 private old age pension scheme 99-101 Charles, Enid 260-1 Cherwell, Lord 385 Chester, D. N. 373, 391, 392-3, 395 child labour 19-20, 28-9, 137, 229-9 Churchill, Winston 184, 200, 202, 217, 405 and the Beveridge Report 347-8, 385-6 wartime coalition government 320, 345, 385-8 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 208-9,210,211,260 citizenship and the Charity Organisation Society (COS) 89-90 and old age pensions 173, 174, 216, 217, 354 and trade unionists 143 Clark, Colin 217 Clarke, Joan S. 367 class and the Charity Organisation Society (COS) 89-90 and contributory pensions 221 and the politics of retirement 403-4 Clay, H. E. 242 ClynesJ.R. 153,198,228 Cole, M. J. 45 Collis, Edgar 126 Colquhoun, Patrick, Treatise on Indigence 27-8 Colville, Sir John 293, 297, 298, 307, 337, 360 Comyns,H.J. 169, 178 'condition of England question' 77 Conley, A. 337

Conservative Party and contributory pensions 156, 187, 188,194,257-8,327 'New Conservatism' 184-5, 200, 202, 203-4,206-13 Thatcher administration 409 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 140,182, 187,199,206-13 consumption, and ageing population 262 contributory insurance, and the politics of retirement 405-6, 407-9 contributory pensions 85, 147, 180 and 'all-in' insurance planning 182 and the Anderson Committee (1923-4) 187-93,201-2 arguments in favour of 221-4 and the Beveridge Report 289, 356, 381, 384 Canon Blackley on 30, 61-5 and the Charity Organisation Society (COS) 92 collapse of case for 153, 154 and the Conservative Party 156, 187, 188,194,327 and the friendly societies 131-3 funding 221-3 Joseph Chamberlain on 72-3 and the Labour Party 218-21, 297-8 and Labour's Pensions Plan 308 and the National Insurance Act (1946) 398 Neville Chamberlain on 26, 204-6, 221, 297, 327 Post Office deferred annuities 73, 74, 94, 149, 150-1 and the Ryland Adkins Committee 170, 175, 178 and spinsters 310-11,313-18 and the Treasury 163, 186 and the White Paper on Social Insurance (1944)394-5 and women 187, 220-1 see also Acts of Parliament, Widows', Orphans' and Old Age Contributory Pensions Act (1925) Cook, A. J. 241, 242 COS see Charity Organisation Society (COS) Courtney, Leonard 21 Cox, Revd Charles 108-9 Crooks, Will 59, 145, 153 Croom-Johnson, Reginald 257 Crowder, A. G. 99 Dalton, Hugh 220, 302, 303, 402, 403

Index Davidson, J. J. 326, 329, 345 Davies, Rhys 183, 239, 288, 303 Davies, S. O. 320, 345 Davison, Sir Ronald 246, 249 death-rates and ageing population 8, 259, 260 and friendly societies 119, 125, 126 nineteenth-century 29 of pensioners 174 and population forecasting 263-4 democracy see mass democracy Denmark 158 Dennison, J. Longstaff 170, 173-4 dependency of the aged, on the Poor Law 38-44, 51 growth of state 4-6 structured 14-16 Devlin, Joseph 171, 178 Dilkes, David 202, 203 Dukes, Charles 183, 195, 337 DunfordJ. H. 171, 178 economic changes, nineteenth-century 18-20,53-4 economic recession inter-war and 'all-in' insurance planning 186 and mass democracy 3 and universal (non-contributory) pensions 197 see also unemployment Eden, Sir Frederick 114 Edwards, Charles 288 eligibility clauses, Old Age Pensions Act (1908)156-62 Elliot, Walter 327, 329, 337, 338, 360 employers and contributory pensions 219 and older workers 176 support for old age pensions 6 and the Treasury Enquiry (1939) 337-9 wage cuts to older workers 229-31, 250, 268, 272 'endowment' of old age 138, 139, 140, 265 Englander, David 77 Epps, Sir George 335, 337, 339, 363, 368, 369, 370, 377, 378, 381, 382, 388 Errington, John 175 Fabian Society 365, 366, 367-8 families, help to pensioners from 282, 283-4 family allowances 287, 315, 376, 377 First World War effect on pensioners 167—9 morbidity rates 128

415 and spinsters 309-10 Fischer, David Hackett, Growing Old in America 13 Fisher, Hayes 160 food expenditure of pensioners 176-7, 280-3 food prices and old age pensions 168-9 and the Second World War 343 Forbes Watson, Sir John 337 Ford, Percy 283 Fraser, Derek 35 Fraser, Duncan 204-5, 206, 209 Fraser, Peter 67, 141 Fremantle, Charles 93-4, 99 friendly societies 112-36 benefits 113 and Blackley's pension scheme 63-4 and Chamberlain's pension scheme 73, 74 and the Charity Organisation Society (COS) 91, 94, 97 income, and means-tested pensions 173 and insolvency' 119-24, 132, 135 life-tables 119-20, 125-6, 136 and the Old Age Pensions Act (1908) 156 and older workers 12 origins and growth 112—15 and PEP 254 problems 115-19 and the Rothschild Committee (1896-8) 115,120,133, 136,150 and sickness benefit 13, 48, 118-19, 120, 122, 126-31, 133-4, 136 and state pensions 131-6, 147, 153 and state regulation 113-14, 116 superannuation schemes 117-18 and women 31 full employment, and the Beveridge Report 287 Gallacher, Willie 295-6, 303, 320, 326, 345 gender and agricultural labour 29 and the Beveridge Report 361-2 and the Charity Organisation Society (COS) 89 and the debate on old age 30—3 'engendering' of the welfare state 220-1 and old age poverty 11, 30-1, 72-3,168, 174,267,268,269 and older workers, division of labour 50-1 and the politics of retirement 404

416

Index

gender {com.) and Poor Law relief 79 see also male breadwinners; male workers; men; women German pension scheme (1889) 69, 78 Gibson, George 307 Gilbert, Bentley 119-20, 123, 125-6, 136, 155,181 Gilbert, Sir Bernard 291, 295, 299, 315, 316, 334, 348, 373, 391, 403 Gladstone, W. E. 67, 85, 148 Glass, D.V. 261 globalisation 18 Goschen, George 86 Gosden, Peter 113 Gratton, Brian 10 Greenwood, Arthur 212, 228, 311, 331, 347, 349, 352 Greenwood, Major 126 Grierson, W. A. 257-8, 327 Griffen, T. 307 Griffiths, James 287, 351, 397 Groves, Dulcie 309 Guy, James 312, 318 Haber, Carole 10 Hackforth, Edgar 337 Hacking, Douglas 334 Hale, Edward 365, 371, 373, 374, 385, 389 Hall, George 340, 345, 348-9 Hallsworth, R. M. 337 Hamilton, Sir Edward 152, 158 Hamilton, Sir Horace P. 191 Hancock, H. D. 191 Hannah, Leslie 9 Hannington, Wai 257 Hardy, George Francis 124 Hardy, Ralph Price 130 Hayday, Arthur 228 health insurance and 'all-in' insurance planning 181, 182, 185, 186, 190, 191 and the Beveridge Report 347 see also National Health Insurance health status and nineteenth-century fall in mortality 126-7 of older workers 48, 51, 362 of retired people 15-16, 22 Hearts of Oak Benefit Society 118-19, 134 Hetherington Committee (1938) 347 Hedley, Robert 150 Henderson, Arthur 198-9 Henderson, H. D. 374 Hennock, Peter 70, 140, 145

Hill, Octavia 32, 76, 82, 87, 88, 107, 108, 110 Hoare, Samuel 207 Hobbes, Thomas 86 Hodge, John 138, 144 Hoey, Fred 230 HollondJ.R. 99 Hookham, R. P., Outline of a Scheme for Dealing with Pauperism 28 Hopkins, Sir Richard 371-2, 373, 374-5, 376 Horam, Miss 228 Hore-Belisha, Leslie 257 Home, Sir Robert 220 Hughes, Tom 133, 136 Humphreys, Noel 152 Hunt, E. H. 36 Hyndman,H.M. 76, 138 Independent Labour Party (ILP) 42, 70, 137-40, 142-3, 146 public works proposals 290 'Socialism in Our Time' 198, 222, 231, 248, 302 see also Labour Party industrial assurance companies 304-5 industrialisation and the ageing population 8-9 and labour market changes 29 and older workers 22 infant mortality, decline in 20, 125 inflation, and old age pensions 168 insurance see 'all-in' insurance planning; National Insurance Inter-Departmental Committee on Health and Unemployment Insurance (1922-3) 170 Ireland, age and pension eligibility 161 Jameson, Major J. G. 171, 178 Jay, Richard 75 Jeffreys, Sheila 308 Johnson, Harcourt 327 Johnston, Tom 222, 234, 236, 239 Jowitt, Sir William 385, 389, 394-5, 396, 397 Joynson-Hicks, William 194-5 Keir Hardie, James 46, 69, 70, 138, 141 Kerr, Hamilton 349 Keynes, John Maynard 260, 262, 290, 395 and the Beveridge Report 370-3, 375-8, 382 Kirk, James 133, 134 Kirkwood, David 257, 329 Knollys, William 36

Index Kuczynski,R. R. 261 labour aristocracy and Blackley's pension scheme 64 and Chamberlain's politics/pension scheme 66, 67, 68-9, 75 and the friendly societies 113, 123, 136 and the NCOAP 167-8 labour market age stratifications 54-7 and the Beveridge Report 355, 359-60, 362-3 and the Charity Organisation Society (COS) 111 and the friendly societies 128-31,136 nineteenth-century changes 5, 19-20, 28-9,44-8,129,400 and older workers 5, 6, 8, 11-12, 20, 22-5, 27, 29, 44-8, 50-9, 399, 401-2, 404 and PEP 248-53 'post-industrial' 409 and the progress of retirement 26-7 rural areas 29, 50-1 seasonal variations 55 unemployment and job redistribution 227-33, 295-7 and women 11, 20, 139, 215 see also older workers labour movement and the Beveridge Report 362 and the friendly societies 134, 136 and old age pensions 65, 85, 137-47, 162,300,401,405 and the Old Age Pensions Act (1908) 156 and universal (non-contributory) pensions 162, 167, 176, 187, 216-21 see also socialism; Trade Union Congress (TUC); trade unions Labour Party and 'all-in' insurance planning 183—4 Cabinet Committee on Retirement Pensions and School Leaving Age (1929)237-41 and the campaign for old age pensions 10 and Churchill's wartime coalition government 320 and contributory pensions 218-21, 222, 297-8 Inter-Departmental Committee on Unemployment (1929) 233-6 Labour's Pensions Plan 301-8, 322-4, 325-6 and the Mond-Turner talks 231-2

417 and the National government (1931) 244 and the National Insurance Act (1946) 397-8 new Labour 409 and the Old Age and Widows' Pensions Act (1940) 342 and the politics of retirement 405 social insurance plans 349 and the Treasury Enquiry (1939) 333, 335 unemployment and job redistribution 227-8, 230-43, 297 and universal (non-contributory) pensions 193-9,222 and the wartime coalition government

345-6 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 210,211-12,213 women 315 see also Independent Labour Party (ILP) Lamb, John 191 Lambert, Revd Brooke 103, 106-7 Lansbury, George 234, 236, 239, 302-3 Latham, George 307-8 Law, Andrew Bonar 179, 189 Laybourne, Keith 302 Le Quesne Committee (1938-9) 318, 329, 333, 350 Leach, William 303, 312, 314, 318 Leybourne, Grace 255, 260 Liberal Party government (1906) 153-5 and Joseph Chamberlain 66, 67, 69 and the National government (1931) 244 and the Old Age Pensions Act (1908)

155-63 and unemployment 231 liberalism, and mass democracy 3-4 life expectancy and the ageing of British society 7-8 and friendly societies 119-20, 125-6 nineteenth-century 20-1 life-tables 21 Lindsay, A. D. 247 living standards present-day pensioners 15-16 rise in nineteenth-century 44-5, 48 and sickness claims 129 Llewellyn Smith, Hubert 274-5, 279-80 Lloyd George, David 65, 151, 153,155, 159, 163, 169, 179, 183, 184 and the National Insurance Act (1911) 288 and Neville Chamberlain 203 public works proposals 290

418

Index

Lloyd, John 64 Local Government Board 38, 41, 79, 95, 147, 148 Loch, C. S. 40, 81, 87, 88-9, 92, 95, 97, 98,104,106,110 and the Aberdare Commission (1893-5) 148, 149 Lorton, Mrs Elizabeth 177 Lowe, Mrs E.M. 176 Lowe, Rodney 403 Macdonald, Gordon 326 MacDonald, Malcolm 347 MacDonald, Ramsay 193, 194, 198, 231, 233, 234, 235, 241 Mackay, Thomas 35, 42, 87, 90-1, 94, 96, 99, 100, 103-4, 106, 107, 110 McKenna, Reginald 155 Macmillan, Harold 245 Macpherson, Ewan F. 169, 178 Maddison, Frederick 134, 145 male breadwinners and the Beveridge Report 396 and the Charity Organisation Society (COS) 94 and the debate on old age pensions 31-2, 73, 139 unemployment 227, 273-4, 284 and the widows' and orphans' pension scheme 200, 220, 221 male workers able-bodied, and the Poor Law 40, 43, 44,82,84,105 and the debate on old age 30-3 economic activity rates 11 and labour market changes 5, 6, 20, 22-3, 24-5 see also older workers; young male workers Manchester Unity of Oddfellows 115, 116-17, 119, 120, 123, 124, 125, 126, 131, 133, 134, 136, 150, 170 Mann, Tom 76 Marlow, William 176 married couples age of wives receiving pension 299-300, 330, 333, 337 and the Beveridge Report 289, 356, 383-4 and Labour's Pensions Plan 304, 326 and the Old Age Pensions Act (1908) 155, 156 and old age poverty 268, 282 PEP and old age pensions 250, 256 and the White Paper on Social Insurance (1944) 395

married women and the Beveridge Report 354, 384, 396 labour force participation 20, 139 and spinsters 309, 311, 314 and the White Paper on Social Insurance (1944) 397 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 214-15,220 Marriott, Sir John 185, 188, 197 Marshall, Alfred 42, 43, 101 Marshall, T H. 4 Maseres, Baron Francis 10, 27 mass democracy 18 and capitalism 3-4, 5 and PEP 247-8 and the Ryland Adkins Committee 179-80 Matheson, Miss M. Cecile 171, 178 Maxton, James 320, 345 Maxwell, Sir Herbert 147 means-tested pensions and the Beveridge Report 353, 360, 361 and the First World War 169 and the labour movement 144 and the Labour Party 195, 197 and the National Insurance Act (1911) 161-2 and Neville Chamberlain's pension scheme 206, 229-30 and the Old Age Pensions Act (1908) 156, 157 and the Old Age and Widows' Pensions Act (1940) 342, 344 and PEP 253 proposed abolition of 185, 187 and public assistance payments 266 and the Ryland Adkins Committee 171-5 Melling, Ernest 319 Memorial Hall Conference, Farringdon, London (1902) 134,147 men, life expectancy 8 Menzler, F. A. A. 251 Metcalfe, John, The Case for Universal Old Age Pensions 45-6 middle-class reformers, and the crisis over pensions 101-6 migration, to urban areas 29, 56 Ministry of Labour 182, 185 Mond-Turner talks 231-2 Money, Leo Chiozza 140, 154 Monroe, Samuel 144 morbidity rates, and friendly societies 126-8 Morgan, Dr Hyacinth 359

Index Morrison, Herbert 303, 391 mortality rates see death rates Mosley, Sir Oswald 235, 236, 237, 239, 240-1, 242, 249, 251, 290, 297, 302 motherhood endowment 138, 186 MPs (Members of Parliament), salaries and pensions 320-1 Myles, John 15 Nash, Vaughan 45 National Assistance scheme 397, 398 National Committee of Organised Labour for Promoting Old Age Pensions for All (NCOL) 75, 134, 137, 139, 140, 145-7, 153-4, 157 National Confederation of Employers' Organisations 337-9 National Conference of Friendly Societies 135, 147, 153 National Conference of Labour Women 167 National Conference on Old Age Pensions (NCOAP) 167-8, 170, 173, 174, 175, 185,319 National Council of Labour 303 National Council of Social Service 352 National Council of Women 316, 396 National Federation of Old Age Pensions Associations (NFOAPA) 10, 26, 280-1, 300-1, 319-22, 325-6, 342, 402-3, 404 and the 1940 Act 342, 343-4 and the Beveridge Report 319, 321, 346, 351-2, 364-5, 366, 367, 380, 383, 384,388-9,391,392-3 and the Treasury 330, 332, 341 and the wartime coalition government 345 and the White Paper on Social Insurance (1944)395-6 National government (1930s) 244, 247, 262, 265, 273 and the Beveridge Report 287 and Labour's Pensions Plan 302, 303 and pensions policy 292, 325-6, 330 National Health Insurance and contributory pensions 201-2, 220, 222 and spinsters 310,312-13 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 213-14 National Health Service 287, 397 National Insurance 124, 170 see also 'all-in' insurance planning National Providence League 64, 77, 147

419 National Savings Association 254 National Spinsters' Pensions Association (NSPA) 10, 26, 308, 311-19, 342, 396, 404 and the Beveridge Report 365 National Union of Societies for Equal Citizenship 223 NCOAP see National Conference on Old Age Pensions (NCOAP) NCOL see National Committee of Organised Labour for Promoting Old Age Pensions for All (NCOL) Neison, Francis G. P. 121, 123, 126 Nettlefold, John 65 'New Conservatism' 184-5, 200, 202, 203-4,206-13 New Survey of London 266, 267, 268, 269, 279,281,283 new technology, and older workers 46-8, 51 New Zealand 158 Next Five Years Group 245 Nineteenth Century (journal) 60, 62 Nuffield Survey on Old People (1947) 264 occupational pensions 19, 108, 267, 268 O'Day, Rosemary 77 O'Grady, James 143, 154 old age changing status of 13-14 structured dependency in 14—16 old age pauperism see pauperism old age pensions Blackley's scheme 61-5, 78 Booth's scheme 70-1, 72, 77-9, 82-4 campaigns for 5-6, 27-8, 59 Chamberlain's scheme 69-75, 78 changing attitudes to pension provision 215-16 and the Charity Organisation Society (COS) 1 0 , 3 8 , 9 0 , 9 2 - 4 campaign against 106—11 empirical case against 94-101 private scheme 99-101 compulsory insurance-based schemes 150 debate about costs 402-3 eligibility cases 153, 172 and the friendly societies 131-6 German scheme (1889) 69, 78 and the growth of retirement 8—10 and the Poor Law 30, 33-8, 41, 43, 44, 49, 151-2, 157, 172 and poverty 10-11 and the state 147-53 state expenditure on 15

420

Index

old age pensions (cont.) and taxation 140-2 and thrift penalties 144, 158, 162, 167-8, 172-5, 178 see also contributory pensions; universal (non-contributory) pensions Old-Age State Pension League 134 older workers and ageism 264 and the Beveridge Report 355, 359-60, 362-3, 369, 370 Booth on the crisis of 48-59 and the Charity Organisation Society (COS) 96, 111 compulsory retirement of 11, 250—1, 252-3 earnings 272 and the First World War 167, 168 and inter-war poverty surveys 268 job redistribution and PEP 248-53, 254, 255-7, 259 and unemployment 227-33, 295-7, 326 and the labour market 5, 6, 8, 11-12, 20, 22-5, 27, 29, 50-9, 399, 401-2, 404 and the labour movement 142-3 and 'loss of capacity' 57 marginalisation of 44-8 and Neville Chamberlain's pension scheme 205, 216 and new technology 46-8, 51 nineteenth-century 21 numbers of compared with unemployed 252 'gainfully occupied' 249-50 and the Old Age Pensions Act (1908) 162-3 and pension proposals 30, 175-6 and the Poor Law 59 and poverty surveys 269—72 and retirement pensions 201, 294-7, 326 in rural society 50-1 and the Second World War 23-4 and sickness claims 129 wage cuts 229-31, 250, 268, 272, 355 Order of United Sisters 116 Orwell, George 281-2 outdoor relief and the Aberdare Commission (1893-5) 149 and the aged poor 29, 34, 35, 36-8, 40, 41-2, 43-4 amounts paid in 36 and the Charity Organisation Society (COS) 88, 92, 97-8, 102-3, 109, 147 costs of 159-60 and gender 79

and the labour movement 144 numbers of old people claiming 266 in rural societies 21 proposed abolition of 80, 86, 103 and the Ryland Adkins Committee 178, 179 Owen, A. D. K. 246, 249, 349 Paine, Thomas, The Rights of Man 27 Pankhurst, Christabel 308 Paul, Maurice 107 pauperism and Blackley's pension scheme 61 and Booth 39, 81-2 and Chamberlain 68-9, 71-3 and the Charity Organisation Society (COS) 87, 93, 94-9 and the labour movement 144 and the Old Age Pensions Act (1908) 156, 159-60 and the Poor Law 38-40 and state pensions 10-11, 151 statistics Burt's return 38-9, 79, 95, 96 Ritchie's return 39, 49, 71, 79 see also Poor Law; poverty Pell, Albert 97, 99 pensioners budgets and food expenditure 176-7, 280-3 circumstances of inter-war 267-72, 282-4 numbers of 15, 23-4, 168, 196, 368 and poverty surveys 265-84 sources of income 283 pensions see contributory pensions; old age pensions; universal (non-contributory) pensions PEP (Political and Economic Planning) 244-59,297,401-2 and the Beveridge Report 365 foundation of 246-8 on job redistribution 248-53 retirement pension schemes 254-9 Percy, Charles 91-2 Pethick-Lawrence, Frederick 219, 241, 327 Phillips Committee 390, 392, 393 Phillips Committee Report (1954) 264, 399 Phythian, Peter 175 Pinkerton, Samuel Andrew 174 Pitt, William 27 Playfair, Lord (Lyon) 148 Poor Law and the Aberdare Commission (1893-5) 149

Index 'able-bodied' and 'impotent' poor 33, 38,40 and aged women 31 and 'all-in' insurance planning 181, 190-1 and Blackley's pension scheme 61, 62 Boards of Guardians 35, 37, 41, 44, 80, 82,86,91,96,102,144 and Booth 34, 35, 36, 41-2, 44, 49-50, 79-82, 83 and Canon Barnett 105 and Chamberlain's pension scheme 70, 71 and the Charity Organisation Society (COS) 86, 87, 88, 90-2, 95, 96-9, 101-4, 108-9 dependency of the aged 38-44, 51 andfriendlysocieties 118, 131 and the labour movement 139, 143-5, 147 and Neville Chamberlain 218-19 numbers of old people claiming relief 265-6, 283 and the Old Age Pensions Act (1908) 159-61 old age pensions and the 30, 33-8, 41, 43,44,49,151-2,157, 172 and older workers 59 and the Ryland Adkins Committee 179 Union practices 49-50, 79-80, 96-7 and young male workers 32-3 see also outdoor relief; pauperism; workhouses Poor Law Reform Association 77-8 population age ratios 262 average age of 263 forecasting 263-4 Royal Commission on (1944-9) 19, 264 see also ageing population Post Office annuity schemes 73, 74, 94, 149, 150-1 Postgate, Raymond 235 Potter, Beatrice see Webb, Beatrice poverty and the Beveridge Report 353, 379 Booth on 53 and the Charity Organisation Society (COS) 87 construction of poverty lines 276-82 debate on old age 27, 29, 30-1 and employment records 192 family and child 284, 293 gender and old age poverty 11, 30-1, 72-3, 168, 174, 267, 268, 269 numbers of old people in 266-7

421 and old age pension proposals 10-11, 28,30,215-16 and the Old Age Pensions Act (1908) 162 of pensioners 176—7 surveys 265-84 Treasury arguments and old age poverty 293-5 see also pauperism; Poor Law pre-industrial societies old age 13-14 Pritt, D. N. 345 private pension schemes 380, 409 Provis, Samuel 152 Public Assistance Committees (PACs) 293, 295 public expenditure and pensions policy in the 1930s 287, 291,298-300,403 see also Treasury railway companies, older workers 52-3 Ramsden, John 202, 204 Ratcliffe, Henry 121 Rathbone, Eleanor 32, 89, 223 Rathbone, William 86 Raw, Lt. Col. Nathan 171, 178 Reddaway, W B. 215, 219, 261, 367 Reeves, William Pember 145 Reid, Sir George 341, 361 retirement compulsory 11, 250-1, 252-3 demand-side explanation of 11-12 fixed age of 5, 19 'infirmity' and 'jobless' 12-13, 22 modernisation model of 8-9 nineteenth-century 21-2 postponement of and the Beveridge Report 367, 370-1, 380 and the National Insurance Act (1946) 397, 398 and the White Paper on Social Insurance (1944) 394 progress of 22-8 spread of 8 supply-side explanation of 9-11, 12 retirement condition 290, 296-7, 326, 331, 335, 338, 407 and the Beveridge Report 355, 357-68, 371,378,380,384 and the National Insurance Act (1946) 397, 398 and the Phillips Committee 390 Ricardo, David 86 rights 4

422

Index

Riley, James 125, 127, 128-9 Ritchie, Charles T. 41, 148 Robbins, Lionel 393 Roberts, Wilfred 326, 327 Robinson, Sir Arthur 191 Robinson, Sir Henry 169,178 Robson, William A. 351, 367-8 Rogers, Frederick 123, 134-5, 139-40, 140-1, 142, 144, 146, 163 Roskill, Oliver 246 Rothschild Committee (1896-8) 74, 75, 110, 150-1, 158, 170 and the friendly societies 115, 120, 133, 136, 150 Rowntree, Arnold 171, 178 Rowntree, B. Seebohm and the Beveridge Report 353, 356, 379 poverty surveys 269, 273, 274, 275, 276, 277-9, 280 Royal Commission on the Aged Poor see Aberdare Commission (1893-5) Royal Commission on Friendly Societies (1871-4) 113, 114,122 Royal Commission on the Poor Laws and the Relief of Distress (1905-9) 79, 160 Royal Commission on Population (19449) 19,264 Royal Commission on Trade Unions (1867-9) 123 rural areas labour market 21, 29, 50-1, 52 and the Poor Law 49-50 wages 63, 64 see also agricultural labour Ryland Adkins Committee (1919) 169-80, 181,195,216 membership 169-71 proceedings 171-80 recommendations 178-9 Salter, Sir Arthur 246 Sanderson, Basil 337, 338 Sandys, Duncan 261 Sansom,J. 145 school leaving age, raising of 233, 237, 242, 249, 254-5 scientific management in the workplace 8-9, 45, 58, 142, 400 Scone, Lord 257 Second World War and the Beveridge Report 287 Churchill's coalition government 320, 345, 385-8 cost of 344-5 morbidity rates 127 and the National government 288

older workers 23-4 and Rowntree's poverty survey 278-9 and social disruption 342-3 Select Committee on National Provident Insurance 132, 147-8 Shaw-Lefevre, W. 41 Sheepshanks, Sir Thomas 316 Shinwell, Manny 320, 345 sickness benefit and 'allrin' insurance planning 188 and Blackley's pension scheme 62 and the friendly societies 13, 48, 118-19, 120, 122, 126-31, 133-4, 136 Sieff, Israel 246, 247 Silverman, Sidney 320-1, 345 Simon, Sir John 322, 323-4, 328, 329, 330,331,344 and the Old Age and Widows' Pensions Act (1940) 340, 341 and the Treasury Enquiry (1939) 332, 333, 334, 336, 337, 338 single women see spinsters Slater, Gilbert 34 Smellie, Robert 327-8, 329 Smith, Adam 86 Smith, Ellis 303, 326 Smith, Richard 21-2 Smith, W.R. 241 Smyth, J. L. 322, 337, 359 Snowden, Philip 163, 193, 195-6, 196-7, 198, 199, 200, 231, 306, 405 on social insurance 288 unemployment and retirement pensions 233-4, 241, 242-3 and universal (non-contributory) pensions 222, 302 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 211,212,220 social class see class Social Democratic Federation 76, 138 social insurance and the Beveridge Report 287-90 and the individual 313-14 socialism and Booth's poverty investigation 76, 77 and Canon Barnett 105, 106 and Chamberlain's pension scheme 66, 70 and the Charity Organisation Society (COS) 91, 92 and the friendly societies 134-5 nineteenth-century emergence of 18 and old age pensions 6, 59, 85, 137-45 and PEP 245 see also labour movement

Index Socialist League 302, 303 Sorensen, R. W. 345 spinsters 308-19, 327 age of pension eligibility 299-300, 305, 311, 312-13, 316, 317, 318, 330, 333 attitudes to 308, 316-17 labour force participation 309, 310 and the Le Quesne Committee 318, 329, 333 and the White Paper on Social Insurance (1944) 396, 397 see also National Spinsters' Pensions Association (NSPA) state dependency, growth of 4-6 state pensions see old age pensions Stead, E H . 75, 139, 145 Steadman, W. C. 134, 147 Stedman Jones, Gareth 86, 102 Stewart, Malcolm 256 Strachey, J. St Loe 92 Strachey, John 241 Strauss, George 321, 345 structured dependency in old age 14-16 subsistence pensions and the Beveridge Report 353, 354, 355-7, 359, 368, 369, 371, 375-6, 378-9, 381, 384, 389, 391-3 and the National Insurance Act (1946) 397 and the White Paper on Social Insurance (1944)394 supplementary pensions 266, 278, 279, 293,339,341-2,344,351 and the Beveridge Report 352, 353, 356, 361,368,369,375,379 Sutherland, William 45 taxation and compulsory retirement 253 and contributory pensions 222-3 financing state pensions through 140—2, 154,197,299 and Labour's pensions plan 238-9, 306, 308 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 208-9,210,211,217,220 Taylor, Philip 387 Tedder, Sir Arthur J. 169, 178 Tewson, H. V. 337 Thane, Pat 162 Thatcher administration, and pension values 409 Thomas, J. H. 231, 233, 234, 235, 236, 238, 239

423 Thompson, Mrs Caroline 177 Thomson, Basil 182 Thorne, G. R. 171, 178,193 thrift penalty, in old age pensions 144, 158, 162, 167-8, 172-5, 178, 185, 189, 191, 193, 197 Tillet,Benl63 Tinker, J. J. 293, 303, 326, 336, 345, 388 Titmuss, Richard 262-3, 343 Tout, Herbert 274, 277 trade unions benefit schemes 124 and contributory insurance 407 and the friendly societies 117, 134, 136 and old age pensions 167 and older workers 6, 44, 47 and retirement 26 unemployment and job redistribution 227, 228-30, 232 of unskilled workers 18, 77, 136, 145 and women workers 310, 312 Trades Union Congress (TUC) 17, 404 and age of pension eligibility 175 and the Beveridge Report 358-60, 363, 364, 366, 370, 378, 380 'collective computation' funding of pensions 324, 331 and contributory pensions 298 and the diet of old people 280 falling membership 230 and the friendly societies 135 and the Hetherington Committee 347 and Labour retirement pensions plan 241 and Labour's Pensions Plan 301, 307, 322-4 and old age pensions 10, 46, 138, 142-3, 144-5, 147, 153, 163, 229, 298-9 and the Treasury Enquiry (1939) 336-7, 338-9, 340 and unemployment 229, 230, 231 and universal pensions 176, 206 and women 315 Treasury and the Beveridge Report 363, 365-6, 371-82, 383, 388-9, 390, 391, 393 Enquiry (1939) 332-5, 350 and the 1940 Act 335-42 and the National Insurance Act (1946) 398 and pensions options in the late 1930s 290-301,325,329-31 and the politics of retirement 406 and spinsters' pension campaign 315—19 Treble, James 133

424

Index

Tribe, Frank 291-2, 294, 295, 299, 322, 329-31,403 and the Old Age and Widows' Pensions Act (1940) 341 and the Treasury Enquiry (1939) 332-3, 333, 335-6, 337, 338 TUC see Trades Union Congress (TUC) Tuckwell, Gertrude 31 Tyrell, H. W. 319, 352, 366, 388 underclass 20 unemployment and 'all-in' insurance planning 181, 182, 183, 185, 186, 188-9, 191 assistance (1930s) 279, 282 and the Beveridge Report 359-60 concept of 127 effect of pensions on 200-1 and job redistribution 227-43, 295-7, 326 and PEP 248-53, 254, 256-7, 258 and Labour's Pensions Plan 305 male breadwinners 227, 273-4, 284 and older workers 25, 201 and spinsters 310 Unemployment Assistance Board (UAB) 182,295,304,326,331 and the Treasury Enquiry (1939) 333-4 Unemployment Insurance Statutory Committee 322 universal (non-contributory) pensions and the Aberdare Commission (1893-5) 149 and the Anderson Committee 191 and the Beveridge Report 353^1, 357, 368-9, 375, 384 and the friendly societies 136 Hookham's scheme 28 and the labour movement 162, 167, 176, 187,216-21 and the Labour Party 193-9, 222 and Labour's Pensions Plan 306 and the National Insurance Act (1946) 398 andtheNCOL 134, 137, 139, 140, 145-7, 153-4 and the Old Age Pensions Act (1908) 157 and the politics of retirement 406 and the Rothschild Committee 151 Rowntree's argument for 276 and the Ryland Adkins Committee 178 and Sir Alfred Watson 171 and the TUC 176,306 urban areas, migration of population to 29, 56

Vallance, William 93, 97, 110 Vernon,WJ. 140, 142 Vivian, S. P. 263 voting rights, and mass democracy 3, 18 wages agricultural 63, 109, 189-90 and Blackley's pension scheme 63, 64 and Booth's pension proposal 83-4 and the Charity Organisation Society (COS) 109 and the friendly societies 135 and old age pensions 94, 111, 143 wage cuts to older workers 229-31, 250, 268, 272 and the Beveridge Report 355 Wakefield, William 328, 329 Walker, Alan 14-15 Walley, Sir John 181, 223 Walpole, Spencer 40 Walsh, Stephen 171, 178 war pensions 214 Watson Committee (1922-3) 186-7, 190, 288 Watson, Reuben 117, 120, 121-2, 133, 169 Watson, Sir Alfred 123, 126, 128, 130, 131, 150, 186, 191 on contributory pensions 189-90 and Neville Chamberlain 205, 207 and the Ryland Adkins Committee 169-71, 174-5, 176, 178 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925)211 wealth, and financing state pensions 140-1 Webb, Beatrice (Potter) 67, 107, 235 Webb, Sidney 42-3 welfare state 'engendering' of the 220-1 and liberal capitalist democracy 4 Wheatley, John 212, 213, 217, 230 White, Florence 312, 314-15, 316, 318 White, Graham 327, 331, 336, 349 White Paper on Social Insurance (1944) 389, 393-7, 407 Whiteside, Noel 127 widows'pensions 140, 183-4, 186, 188 and the Labour Party 195 and Neville Chamberlain's pension scheme 205, 206-7, 210, 214, 220, 223-4 and 'New Conservatism' 200, 201 and spinsters 310-11, 313, 314, 315-16 see also Widows', Orphans' and Old Age Contributory Pensions Act (1925)

Index Wilkinson, Rev. J. Frome 64, 116, 118, 122, 123, 133 Williams, Edward 303 Wilson, Havelock 70 Wilson, Sir Horace 191, 207, 235 Wing, Tom 167 Wolstencroft, F. H. 364 women age of receiving pensions 299-300, 333, 339-40 and the Beveridge Report 361, 370, 380, 383-4 and Booth's old age pension scheme 78-9 and Chamberlain's pension scheme 72-3 and the Charity Organisation Society (COS) 94 and contributory pensions 187, 220-1 in the drapery trade 55 and the friendly societies 116, 118, 134, 135 labour force participation 11, 20, 139, 215,309 life expectancy 8 motherhood endowment 138, 186 'old age experience' of 26 and the Old Age Pensions Act (1908) 162,201,220,221,289 and old age poverty 11, 27, 28, 31, 72-3, 168,174,177,267 older workers 50-1, 52, 272 and social insurance 289 and trade unionists 143 and the White Paper on Social Insurance (1944)396-7

425 and the Widows', Orphans' and Old Age Contributory Pensions Act (1925) 214-15 see also gender; married women; spinsters; widows' pensions Women's Co-operative Guild 167, 183 women's movement 18 Wood, Sir Kingsley 207, 311, 312, 318, 346, 385, 390 Woodall, Henry 171, 178 workhouses and the aged poor 33-6, 4 1 , 5 1 , 7 1 , 7 9 Booth on 80-1 and the Charity Organisation Society (COS) 97, 99, 110 in rural communities 21 working class and the Charity Organisation Society (COS) 90, 91 and mass democracy 3, 68 and old age poverty 71-2 workmen's compensation 45, 47-8, 74, 143, 182,347 Worthington-Evans, Sir Laming 212 young male workers and Blackley's pension scheme 61-2, 63 and company pension schemes 324 de-industrialization of 5 and PEP 251-2 and the Poor Law 32-3, 82, 84 unemployment and job redistribution 227-8, 232-3, 238, 296 younger workers, concerns about 30