After 100 years the pension reaches old age

One hundred years ago this week, on May 7, 1908, Prime Minister Herbert Asquith announced his government's intention to introduce an Old Age Pensions bill.

For the first time in British history, the elderly would receive a pension from the State.

The idea of a universal old age pension, payable to all elderly people as of right, was first raised in the French Revolution of 1789-99.

It was to be another 100 years before Germany became the first country in the world to introduce the provisions.

A further nine countries followed Germany's lead before the British government finally decided it was time to act. With improvements in medical knowledge, people were living longer yet there was no State provision for old age. In 1906, almost 20 per cent of the population over 65 were classed as paupers.

Women fared particularly badly; about three-quarters of the recipients of "outdoor relief" were elderly women.

Old people who could not rely on the kindness of relatives to look after them often ended their days in the workhouse. By the end of the Victorian period, the largest group of workhouse inmates were the elderly.

Workhouse life was made as harsh and humiliating as possible so that the able-bodied poor would apply only as a last resort. But while the system was designed to discourage the work-shy, it meant that the elderly, through no fault of their own, were also penalised.

Aged pauper couples were not allowed to share a bedroom.

Workhouse inmates had their clothes confiscated and were forced to wear prison-style uniforms.

Many suffered from malnutrition; hardly surprising considering that the standard dinner was 6oz of bread and 2oz of cheese.

The scandalous treatment of the elderly in what was then the richest country on Earth led to growing calls for State intervention.

In 1891, the philanthropist Charles Booth published his first old age pension proposals. In 1899, a Parliamentary select committee investigated and advocated noncontributory old age pensions.

In 1902, a campaign group called the National Committee of Organised Labour on Old Age Pensions was formed; its founder, George Barnes, defeated the Conservative Cabinet minister Andrew Bonar Law in the 1906 general election.

The fiery Welsh Liberal Party politician David Lloyd George, who became Chancellor of the Exchequer in 1908, had long advocated old age pensions and was determined to take action that, in his own words, would "lift the shadow of the workhouse from the homes of the poor".

But though his Old Age Pensions Act was groundbreaking, its provisions could not be described as generous. A pension of up to 5s (25p) per week would be paid to single men and women only when they reached 70; married couples were to receive 7s 6d (35p).

The pensions, although non-contributory, were means tested: anyone over 70 who had some income had it deducted from their pension.

Only British subjects resident in the country for 20 years were eligible; anyone who had received poor relief in the past 12 months or had been in prison within the previous 10 years was barred. In addition, pensions were not available to those deemed to have habitually failed to work according to their "ability, opportunity and need".

Limited as the provisions were, Lloyd George's proposals were, for some, the thin end of the wedge. Old age pensions would prove "profoundly demoralising" and would "weaken the moral fibre of the nation", claimed critics such as Tory peer Lord Robert Cecil.

But the government's scheme proved hugely popular. The cry "God bless that Lord George" (they thought only a Lord could be so kind) was heard across the country when the first pensions were paid on January 1, 1909.

A huge bonfire was lit on the White Horse Hills. In Bromsgrove, the streets were hung with bunting and bands paraded the streets. In Kettering, all the pensioners of the town were entertained at tea and two of them moved a vote of thanks to the government.

The National Society of Amalgamated Brassworkers sent a telegram to the Prime Minister which read: "Brassworkers wish you and the Chancellor of the Exchequer happiness and prosperity for the New Year. Express gratitude for State recognition of veterans of industry generally on this Glorious Pensions day."

More than 400,000 pensions were soon being paid to nearly 45 per cent of the population over 70. To remove any stigma in receiving the benefit, the scheme was administered by the Post Office rather than the parish or Poor Law.

It wasn't all plain sailing: old people who were unable to write and who failed to bring in a relative or friend to sign for their pension in the presence of officials were told they could have no money.

Over the years, State pension provision gradually became more generous. In 1925 a contributory State scheme for manual workers and others earning up to £250 a year and available from the age of 65 was established. The measure was to almost double the income of pensioners.

Bigger changes followed after the Second World War. The 1946 National Insurance Act extended contributory State pensions to all and lowered the retirement age to 65 for men and 60 for women. In 1975, the State Earnings Related Pension Scheme (Serps) was introduced, providing a second-tier pension paid by the State and financed by National Insurance contributions.

Yet in more recent years, the value of the State pension has declined markedly. In 1980, the link between State pension increases and average earnings was broken by Margaret Thatcher's Conservative government. Pension rises would thereafter be linked to prices but because average earnings generally rise much faster than retail prices, the real value of pensions soon began to fall.

It has been calculated that if the link with earnings had not been broken, a basic state pension for a single pensioner would now be worth £145.15 a week.

One hundred years after their introduction, British pensions are now the lowest in the European Union. A recent survey found that the basic state pension of £90.70 a week is equivalent to 17 per cent of the average earnings, compared with the EU average of 57 per cent.

The 25p a week top-up for the over-80s has not been raised since its introduction in 1971: then it bought a bag of coal, now it doesn't even cover the cost of a second class stamp.

One in five British pensioners lives below the official poverty line, the vast majority of them women.

Moreover, the UK also has one of the highest retirement ages in Europe at an average of 62.6 years, with 57 per cent of people aged between 55 and 65 still working.

The Government has pledged to restore the link between pensions and average earnings in 2012 but only if it can afford to. If not, the change will have to wait at least another three years. And even then the Government's reforms are part of a package that will also raise the retirement age to 68 from 2044.

It's often said that a civilised country is judged by the way it treats its old people. As we mark the centenary of the introduction of old age pensions, wouldn't it be nice if our politicians gave Britain's pensioners the fair deal they really deserve?