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.

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 élite, 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.

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.

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.

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. 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.

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. 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-in’ 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.

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. 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.

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’.

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. 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. 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.

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 damage, or the loss of tools of a trade.

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. 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. 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.

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) – 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’.

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. 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.