One hundred not out – Parliamentarians mark a century of the state pension

If current generations think concerns about pension provision is a modern headache they need to look back in history, and perhaps find some guidance in the process. This was the clear message from the autumn meeting of the All-Party Parliamentary Group (APG) on Archives. On the auspicious date of 5 November, the APG met at the Palace of Westminster to mark the centenary of the 1908 Pensions Act and the start of the 2008 Archives Awareness Campaign run, by the National Council on Archives (NCA).

Next to a display of the original Act and the public petitions both for and against the landmark legislation, a panel of influential speakers debated how the Act, which for the first time established a state pension for the United Kingdom, came into existence. Frank Field MP used his first-hand experience as Tony Blair’s first ever Minister for Welfare Reform to chair the debate as eminent historian and Lloyd George biographer, Lord Morgan, Pat Thane (Leverhulme Professor of Contemporary British History, the Institute of Historical Research) and Alan Herbert (Chairman of the Pensions Archive Trust) discussed the context, content and impact of the Act and its relevance for modern policy making.

Debate between the panel and that invited audience of archivists, historians, politicians and pensions experts began by covering analysis of what the original intentions were for state pensions were and how far the initial characteristics of the system created by the 1908 Act have persisted to the modern day. The 1908 Act established a non-contributory, low level and means-tested benefit funded by central government. The Act’s purpose was to provide assistance for the ‘deserving’ poor. Consequently, the first state pensions did not provide enough for subsistence, requiring supplements from other means. Means testing was also introduced further restrictions on who was to be eligible for the payments. The Treasury was keen to keep costs down even further and insisted on a starting age of 70 for the new benefit. The first handouts issued in 1909 were given to only 500,000 people, two-thirds of whom were women.

So how much of the original Act’s principles remains today? In 1945 the first majority Labour Government brought in a contributory element, but the central government funding of the payments, a means testing element, the very low value of the payments and the Treasury overview of the system persist. Contemporary debate over the issue of pensionable age still looks set to dominate the agenda for years to come. The ever-present feature of state pensions then and now is that they do not provide the full support that people need to survive into old age. As Alan Herbert pointed out and Frank Field readily agreed, the role of occupational pensions has been fundamental to supplementing state pensions for many, right from their inception.

One of the surprising facts to emerge from a thorough investigation of the archives is the dominance of women in the development of state pensions. Women were to be the primary beneficiaries, picking up two thirds of the first pensions. They lived longer than men, worked irregularly, were low paid and had little chance to build savings; a combination of issues that many women still face today.

A formidable range of British Parliamentarians were involved in the creation of the 1908 Act – Asquith, Lloyd George and Winston Churchill dominated the Edwardian political landscape and provided the driving force for the reforming zeal of the 1906 Liberal Government. However, it was noted that a state pension had been on the political agenda since the 1870s, encouraged by innovations in Germany and New Zealand. By the start of the Twentieth Century, concerns about poverty and health dominated the public agenda and with the Liberal’s 1906 landslide election win, meant that in 1907 the Chancellor HH Asquith started to put into practice for the first time in British politics, wealth redistribution by higher taxes on the rich. Asquith had a shaky grasp of the details of the Bill and several examples of slip-ups by him during the early stages of it’s Parliamentary journey threatened to expose many of the potential weaknesses in the Government’s position. However, upon the retirement of Campbell-Bannerman as Prime Minister, Asquith moved into No 10 and Lloyd-George (the Obama of his day according to Lord Morgan) took over as Chancellor to see the Bill through its second reading and subsequent Parliamentary hurdles and the rest is history. Another Liberal, William Beveridge, took a close interest in the new legislation and the development of state pensions and was particularly uncomfortable with means testing element for the inevitable unfairness it bought for borderline cases and its ability to deter take-up. Means testing remains a modern concern that has yet to be properly resolved, with initiatives like tax credits and income support being the modern manifestation of means tested benefits.

Another striking similarity with today is how politicians looked to Europe for good practice. The German scheme started by “Iron Chancellor” Otto Von Bismark in the late nineteenth century was closely scrutinised. It was actually an incapacity benefit for skilled workers in an attempt to deter out of work labouring classes from the appeal of socialism. Whilst not completely copied in the UK, British policy-makers still look today to European welfare systems, including Germany, for inspiration across all areas of social policy.

The contribution to the debate by the Pensions Archive Trust brought out the significance and historical development of occupational pension schemes. Amongst the first occupational schemes included well-known companies such as WH Smith and Retuers, developing pension provisions for their employees in the 1860s. Driven by incentives such as taking advantage of taxation rules, pushed by legislation and encouraged by the religious beliefs of many of their founders, these early occupations schemes were and remain an important supplement to the state pension. Alan Herbert also highlighted the importance of occupation pension archives as a vital historical research resource and the vulnerability that surrounds many such collections, including archives held in electronic format, which are particularly susceptible to digital obsolescence and ease of destruction.

Whilst, at first glance, the marking of a centenary of a piece of legislation may be considered a rather dull and dry undertaking and not one to spark lively and controversial debate. However, the 1908 Old Age Pensions Act was the start of a completely new role for government which was ultimately to result in the Welfare State. It embodied the new political initiative of wealth redistribution and a vision of social intervention that still endures. Those that built the Act faced exactly the same problem as today’s politicians - cost, payout value, age limits, parameters for means testing. The Act marked a complete break with previous definitions of government responsibilities, an end to laissez-faire and was a radical reaction to the very real concern of poverty in Britain. If modern governments are to tackle today’s pension issues they need to be as radical and learn from that Liberal government to finally ‘think the unthinkable’.

The All Party Group on Archives was established to raise awareness of archival issues amongst Parliamentarians. It is chaired by Tim Boswell MP and the National Council on Archives provides the secretariat. For more information contact René Kinzett, NCA’s Head of Public Affairs (020 8392 5376, [log in to unmask]).

Elizabeth Oxborrow-Cowan

Consultant Archivist

Tel/fax 01939 234289