Pensions and Poverty (1954)

From the May 1954 issue of the Socialist Standard

In April, 1908, a young man lost a bye-election in North-West Manchester. He had been President of the Board of Trade in Mr. Asquith’s government, serving on the cabinet with Sir Edward Grey, Haldane and Lloyd George. A brilliant future was predicted for him. His name was Winston Churchill. He was not out of Parliament for long. In the Manchester Reform Club after the count a messenger brought a telegram from the Liberal party in Dundee, inviting him to contest a pending bye-election. Before Dundee voted, the Chancellor of the Exchequer presented his budget, with provision for the payment of old age pensions.

The decision of the Liberal government of 1908 to introduce the Old Age Pensions Act was first announced in the King’s speech in January of that year and was met with cries of, “The country can’t afford it!” (The annual cost was £6 million—today it is over £275 million.) Nevertheless, the year saw the Act passed, granting to people of 70 or over a pension of from 1s. to 5s., subject to a means test. After 1908 many Acts covering sickness and unemployment insurance were passed, including the Widows’, Orphans’ and Old Age Contributory Pension Scheme of 1925— which introduced contributory pensions—and the Old Age Pensions Act of 1936. which allowed non-contributory pensions at 70. Thus when the 1939 war came the Statute Book carried a mass of legislation dealing with national insurance. The system had developed piecemeal and contained many inconsistencies and much overlapping between government departments, local authorities and the Approved Societies.

To unravel this tangle an inter-departmental committee was set up in June 1941, under the chairmanship of Sir William (now Lord) Beveridge, to survey the whole field of social insurance and allied schemes and to make recommendations on their inter-relation. This committee produced in November 1942 the famous Beveridge report. At that time, in the depth of the war, the report appealed widely as a design for a great new world and many extravagant hopes were conceived. Beveridge, himself was, apparently, less sanguine. In the Sunday Times of 14/2/54 he says, “The Beveridge Report . . .  was a model . . .  of financial caution and of moral responsibility, above all in regard to pensions.”

In February 1946 the National Insurance Act 1946 was debated in the House of Commons. Although the Bill was sponsored by the Labour government of the time, the Conservatives gave their support and the second reading was taken without a division. The Act implemented many of Beveridge’s recommendations and covered a wide and complex field. The principle of the “subsistence level”—that is, benefits as of right high enough to command the bare necessities of life—was accepted and a method of adjusting benefits to allow for changes in the cost of living was devised. Minimum old age pensions were immediately raised to 26s. per week, thus rejecting Beveridge’s proposal of a gradual increase over a period of years. Perhaps it was this splash of generosity which moved Mr. Arthur Greenwood to say in the debate on the Bill, “ It . . .  is a contribution to the better life which . . .  the people of this country richly deserve . . . which will enable the people . . . to tread the path of greater freedom with great dignity . . . ”

As laid down in the National Insurance Act of 1946, retirement pensions were easily the most expensive of benefits. It was estimated at the time that in the first year of their payment they would account for half the cost of the entire National Insurance Scheme and by 1976 for two-thirds of the total cost In addition, many people receiving pensions at the new higher rate had only contributed amounts in accordance with the former (lower) pension. Thus it was expected that even if pensions remained at 26s. per week, the expenditure of the pension fund would eventually exceed its income. But the rise of prices since 1946 has reduced the buying power of the 26s., so that in 1951 and again in 1952 it was necessary to apply the principle of the "subsistence level” and increase the minimum retirement pension. Today it stands at 32s. 6d. And old age pensions, whatever the amount will become steadily payable to an increasing number—in the next 20 years the number of people of pensionable age will rise from seven million to 10 million.

These factors have aggravated the problem of balancing the accounts of the National Insurance Fund. The government actuary’s report on the scheme for 1951-52 estimated that only 5 per cent of expenditure on retirement pensions is covered by past contributions: this year is expected to be the last in which the fund’s income from contributions and exchequer assistance will balance with its expenditure. In the future there will be a growing deficit which will rise to about £417 millions by 1978 and which can only be eased by such measures as: (a) reducing pensions; (b) postponing the minimum pensionable age; or (c) increasing contributions. Once again, “. . . the country can’t afford it! . . .” The Manchester Guardian of 10/2/54 commented, “ The problems involved . . .  are such that it could make the financing of National Insurance a main issue at the next election.” So we are nearly back to Dundee, 1908!

Nobody should conclude from this that the life of an old age pensioner is one long spree of riotous extravagance. In fact, the worry of making ends meet presses as heavily today as ever. Both the News Chronicle and the Manchester Guardian have recently published a series of articles on the serious distress of old people. A letter to the editor of the News Chronicle on 4/3/54 told of an unexpected visit on a woman pensioner which found her without a fire, making a dinner of a slice of dry bread and a meat extract cube dissolved in water. In the Manchester Guardian of 11/11/53 appeared the story of a W.V.S. worker who helped to distribute cheap lunches to old people in Poplar. Among those she served was the blind man who lived alone in a room at the top of a lodging house, who never had a fire, a plate or a saucepan. He would sometimes grumble and swear, sometimes smile obsequiously, at the women who brought his food. And there was an old woman who lay in a room congested with dusty Victorian furniture, who never spoke, only glared and spat into a kitchen bowl. These are not exceptional cases. In his report for 1953 the Medical Officer for Brighton recorded some terrible poverty amongst the aged and contended that their lot has actually worsened since the introduction of the so-called Welfare State. The National Federation of Old Age Pensioners’ Associations calculated in May 1953, after a survey of 2,700 pensioners, that the 32s. 6d. per week fell short of a single pensioner's actual needs by 6s. 6d. and that many pensioners were consequently living below the line of subsistence. These facts are hard to reconcile with Mr. Greenwood's promised path of freedom and dignity.

Inadequate pensions have compelled more and more people to apply for National Assistance. In December 1953 nearly one and a quarter million persons who were drawing National Insurance benefits were also receiving National Assistance. About 80 per cent, of these were old and sick. The needs of a single person, excluding rent, are assessed by the National Assistance Board at 35s. per week. In most cases an additional average of 11s. 6d. per week is granted for rent. This payment is subject to a means test. According to the National Federation of Old Age Pensioners, it leaves less than 2s. to be spent on food each day. This, then, is the outcome of the hopes and the promises to care for the aged. We have a pensions scheme, which, whilst fast running into the red, does not provide benefits large enough to keep pensioners on the level of bare subsistence, so forcing them to submit to a means test to obtain assistance which in turn is insufficient. The reformers’ plans have once more gone awry: the means test of so many unpleasant memories is with us again. Lord Beveridge said in the House of Lords on 20/5/53 that “National Assistance, which the experts and I thought would have to continue on a small scale and would gradually diminish, is increasing year by year. Today there are at least twice as many people, nearly two million people, in receipt of National Assistance, subject to a means test, more than there were three or four years ago.”

Old people may well wonder why their burden is always so heavy. Firstly, they are not poor because they are old; but because they are old workers: their poverty is the distilled, concentrated poverty of the whole working-class. It is a condition which only the working-class experience—aged capitalists do not need to apply for National Assistance. Secondly, capitalism is not much interested in old people. Workers live only by their wage, which depends upon being able to work. When working ability is impaired by approaching old age the wage is threatened and eventually ceases. Employers, in their own interests, have most use for young workers—the old, if employed at all, are relegated to such jobs as nightwatchman or doorkeeper. Some firms are generous to their superannuated employees, but they are the exception and have little effect on the problem.

The decline in the working usefulness of old people is reflected in the community at large. They become unwanted, sometimes even by their own families. They are pushed from place to place and increasingly regarded as a nuisance. Some are left to decay in filthy, remote rooms. Others, like the old lady and the blind man in Poplar, maintain a fierce, abusive independence; perhaps they are the most pitiful of all.

It is fear of coming to this that makes workers support pension schemes in our workplaces and pay into the old age endowment policies which the insurance companies organise. The advertisements of these schemes aim to excite response by playing upon the dread of aid age. “ If it hadn’t been for him I should not have been provided for,” says the widow-like lady of one advertisement. The benefits of these schemes may ease old people’s poverty, but its abolition is well beyond their scope.

Despite the years of legislation since 1908, to grow old can still be a catastrophe. Pensions, allowances, cheap subsidised tobacco come and go—the pensioners’ poverty goes on, seemingly for ever. The history of old age pensions is one of despair, makeshift, futility— and distress. It is a fair sample of the history of reformism itself. This lesson must be learnt. Said Henry V to his reluctant soldiers before Agincourt, “Old men forget, yet all shall be forgot . . . " A melancholy phrase. Yet somewhere there must be hope. Is it too much to ask that old men should for once remember? We will settle for that. As a beginning.

Ivan