March 4, 2013, by Rosamund Aubrey

Let them work for their pensions!

The workhouse was first introduced in the early 18th century to replace outdoor relief and to house the destitute, although purpose built workhouses came later. Conditions were harsh, poor, monotonous food, married couples were separated as were children from their parents. In 1896 Charlie Chaplin aged 6, his half brother Sydney, and their mother Hannah were admitted to Lambeth Union Workhouse in South London. In his autobiography Charlie describes his forlorn bewilderment when he was separated from his mother and he was later separated from his brother too.

There was fear and dread of the workhouse and although inmates could leave, many were too old or sick to do so and mortality was high. Providing for the poor may have always been a problem, but it wasn’t until 1563 that the first Poor law was enacted. The onus was on a parish to look after its own poor and even women in labour were moved on so a parish shouldn’t be responsible for another pauper. The language was very redolent of the 21st century, there were the deserving and the undeserving poor, and attitudes to the poor have changed very little in the intervening centuries.

At one time there were 15,000 workhouses in the UK, not only have most of them disappeared, but the roads named after them have been renamed as residents objected to the association; Workhouse Lane in Holt became Pearson Road. Workhouses as such ceased to exist on 1 April 1930, but some were kept open by local authorities as homes for the elderly or unmarried mothers.

When a Liberal government was elected in 1906 it ended 30 years of talk, but no action by passing The 1908 Old-Age Pension Act which was a major step towards the welfare state; the pension was 5 shillings (25p) for a single person, 7s 6p (37.5p) for a married couple; it was non-contributory and paid to those over 70 whose income was less than £21 10s per annum. There were concerns over the cost, hence the small amount and families were expected to help support pensioners. Even so it brought comfort and a limited measure of independence to the half a million who were eligible, many of them women.

The aim was to target pensions for the poorest older people without stigmatising them and deterring them from applying, but it include a test of ‘character’ (or respectability), it was decided to exclude all who received poor relief after 1 January 1908, and all those unable to provide proof of ‘thrift’ during working life. The committee set up to make recommendations did not suggest how thrift was to be defined. ’Criminals, lunatics and aliens’ were also excluded.

When it was introduced in 1909 there were 100 centenarians and about half the population died before they were 60; in 2012 there were 12,640 centenarians, an 86% increase since 2000, and there are some 7.2 million people over 70. The state pension became contributory, but contributions have not been invested, pensions are paid for by the current workforce, consequently the spectre of an aging population supported by a smaller workforce has been around for some years. Even with a rise in the retirement age, there are only approximately 4 workers to every pensioner, so the cost of pensions is still with us.

In 1980 the Thatcher Government changed the indexation of pensions from average earnings to the Retail Price Index (RPI); consequently the state pension is down from approximately 20% to about 15% of average earnings, one of the lowest in the OECD. Pensioners won a promise from New Labour to index the state pension by 2015 to the highest of national average earnings, Retail Price Index (RPI) or 2.5%, but without restoring the value lost since 1980. But in the Coalitions 2010 Budget, it was announced that indexation of the state pension will switch in 2012 from RPI to the Consumer Price Index (CPI) which is between 1% and 2% lower. This doesn’t sound much until you consider its cumulative effect.

A fifth of UK pensioners live below the OECD poverty line of £170 per week and over half are eligible for means tested benefits. Fuel prices have risen well above inflation, food also and with inflation higher than interest rates, pensioners with savings are seeing them lose value, while those who have to buy an annuity are getting a worse deal than ever. Most companies have closed their final salary pension schemes; public sector pensions are portrayed as ‘golden’ and a recent report notes that 20% of UK workers are not saving for a pension. Not surprising when many workers are receiving means tested benefits to top up low pay.

The current pension is £107 per week; from 2016 it is proposed to introduce a flat pension of £140 per week, but this will not apply to those retiring before 2016 – one way to lose the grey vote. It has been suggested that immigration is a sensible way to increase the ratio of workers to pensioners as our birth rate is lower than needed for replacement, but immigration is a political hot potato, so unlikely to be a vote winner either. Lord Bichard recently caused outrage when he suggested pensioners should work for their pensions – the response was ‘we already have’. Bichard “is a cross-bench peer, a technocratic former senior civil servant who worked closely with the last Labour government. His suggestion was raised in the context of discussions between politicians, bureaucrats and Bank of England experts on the state’s response to demographic change.

We should pay attention to the likes of Bichard because the grey men in suits can often be more honest about what they want to do with us than the elected politicians.”

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