I was delighted to see a recent article in the Daily Telegraph by my former colleague Philip Johnston. Sometimes people ask me if I think my book has had any influence. Articles such as his clearly show an influence and, through him, must pass on the influence to others.

Philip made full use of the chapter in my book about the state pension. He did not mention me as the source of most of the historical material but I don't mind since he quoted from the book and mentioned it. He included quotations from Octavia Hill which I remember finding when reading through the proceedings of a royal commission in a library in the City. They are not quotations that get much of mention in most descriptions of the development of the welfare state.

Here is an extract of Philip's article:

The Beveridge Report, which laid the foundations of the post-war welfare state, declared that every citizen who paid his or her contributions should be able to claim an "adequate" pension worth more than any means-tested benefit. By the mid-1970s, the Labour Party was seeking re-election with a pledge to link the pension – long since lowered to start at 65 for men, and 60 for women – to earnings. Although that decision was reversed by the Tories in the 1980s, again the myth was perpetuated that the state pension could provide in old age.

Yet its value has declined over the years to the point where to rely solely upon the state pension is to be among the poorest people in the country. The average annual pension is now about £4,300, though this can be enhanced by winter fuel payments, pension credits or housing benefits, depending on your means. But even then, it is still far below what the Government itself considers the poverty line of about £12,500 a year, or 60 per cent of median average earnings.

After 100 years in which living standards have quadrupled, a pension designed to prevent the poorest in society enduring a penurious old age has failed in its purpose. The means testing of the supplements has discouraged thrift; while the assumption that "the state will provide" has rendered the responsibility of families to look after their elderly kin largely a thing of the past. Meanwhile, the cost of paying out the pension to a growing number of elderly people who are living longer means many will be required to work beyond their 65th year – as they used to before the pension was introduced – to make ends meet.

Might we have been better off without the state pension? "It seems likely that if the state pension had not been introduced, British people would have saved a great deal more and, overall, would probably now be wealthier in their old age," says analyst James Bartholomew, in his book The Welfare State We're In. "The late 19th-century trend for people to become less benefit-dependent would have continued, and it would be normal to have very substantial savings. Old people would have more independence and dignity in retirement."

The full article is here.

Posted by James Bartholomew • Indexed in Pensions

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