An Irishman's Diary
TOMORROW the Minister for Social and Family Affairs, Mary Hanafin, will unveil a new stamp for An Post commemorating the centenary of the introduction of statutory pensions in Britain and Ireland, writes Ronan O'Brien.
The Old Age Pensions Act, which received royal assent on August 1st, 1908, granted a pension of 5 shillings to those with annual incomes under £20, and a lesser amount, determined on a sliding scale, to those with annual incomes of up to £31 10s. The Act was one of a number of social reform measures implemented by the last Liberal government, that of Herbert Asquith. It marked the beginning of the end of the infamous poor law system and the birth of the modern welfare state.
The pensions Bill was not controversial. In fact, if the measure was associated with any particularly party or individual, that person was a Unionist. Joseph Chamberlain, the Liberal Unionist who split from Gladstone over Home Rule in 1886, was the first front-line politician to come out in favour of support for the elderly in the 1890s. Old age pensions figured prominently in the electoral addresses of Unionist, not Liberal, candidates in the 1895 election, which saw the Unionists returned to power.
Yet in spite of this support, and innumerable royal commissions and parliamentary committees, no progress was made on the issue for a further decade - for a number of reasons. There were differing views about the kind of scheme that should be implemented, reflecting a divide that had dominated discussions of the topic since the 1870s.
Should pensions be contributory or non-contributory? Chamberlain himself initially favoured a contributory scheme but moved away from this on practical considerations. Just how would one start a contributory scheme, for instance? Would it mean that only those who started to make contributions in their younger years could qualify? That in effect would postpone the implementation of any scheme for a generation.
Another difficulty for supporters of contributory schemes was the hostility of the friendly societies, the working men's institutions which provided insurance against sickness and funeral benefits. These were hostile to any "nationalisation" of the insurance business. From their perspective, the line between insuring against sickness and age-based infirmity was a fine one. Their success depended on the principle of Victorian thrift: self-help, not state help. Nevertheless, the fact was that by the late 19th century the societies were already under considerable pressure because of the tendency of their memberships to live longer. They were not in a position to put up their fees to cover the true cost of their "books" as the competition between societies was intense. When they finally agreed not to oppose a state-led pension scheme it was on the basis that it was non-contributory.
But possibly the most important factor blocking the introduction of any scheme during the Unionist years was the outbreak of the Boer War, which proved a considerable cost on the British exchequer. Chamberlain's imperialism had a habit of winning over his social radicalism.
The factor which turned the Liberal Party towards pensions was the rise of the Labour Party. Pensions for the aged, non-contributory and universal, had been a trade union cause for decades.
Around 30 Labour MPs had been elected in the 1906 election and it was clear that their potential support was higher. Both the Liberals and Conservative wanted to keep an eye on the working man's vote. The 1908 Act copper-fastened the Liberals' lead in this regard. But it would probably be unfair to suggest this was the only reason the Liberals acted the way they did. They themselves possessed a radical wing led by David Lloyd George and Winston Churchill and "social liberalism" was a strong intellectual strand within the party.
The Bill introduced into parliament by Lloyd George as Chancellor of the Exchequer in May 1908 mirrored the scheme announced by Herbert Asquith in his budget. The death of the former prime minister Henry Campbell Bannerman had come so close to the budget date that Asquith, now Prime Minister, delivered the budget speech. Though now attributed largely to Lloyd George, the pensions scheme was largely his work. It was non-contributory, but means-tested. It was available only to people over 70 years of age, a fact which led to considerable hostility from the Labour Party and the trade union movement. Those who had claimed outdoor poor relief in 1908 - society's true paupers, unsupported by family members - were precluded from claiming the pension.
The government assuaged some opposition by stating clearly that the Bill marked the first stage of a process rather than an end in itself. Its key concern was the cost of the proposal and it was reluctant to concede amendments, such as a reduction in the qualifying age, which would add to the fiscal burden. It was aware too that its calculations about the numbers who would qualify for the scheme, especially in Ireland, were vague. Indeed, the costs of the Bill soon outstripped the government's £6 million estimate. In Ireland the cost of claims ran to three times government estimates.
While not particularly controversial itself, the Old Age Pensions Act serves as the backdrop to the biggest political fight in Edwardian politics, the "People's Budget" of 1909, perceived by Conservatives to be an assault on the rights of property.
Its purpose was to pay for the pensions scheme and naval rearmament. The rejection of that budget by the House of Lords led to the most bitter period of political partisanship in modern British history, which was intensified by the battle over Home Rule for Ireland.