The 1908 Old-Age Pension Act

The 1908 Old-Age Pension Act was revolutionary legislation embodying the very best of British politics. For the first time there was to be state intervention in the living standards of the people. Assistance was given through non-contributory pensions recognising that the very poorest couldn’t fund a retirement plan. The Liberal government’s political campaign was turbo-charged once Lloyd George became Chancellor in 1908. The Act was financed by tax increases in the 1909 People’s Budget introducing the concept of taxation as redistribution of wealth. This Act was a piece of political altruism as none of the recipients could vote. Voting was directly related to wealth in 1908.

No one doubted both the grandeur and greatness of imperial Britain in 1908. Yet many British people lived in shuddering poverty: poverty with shaming characteristics, the most glaring of which emerged during the Boer War. Poverty, for the first time, had had an adverse military consequence. Britain failed the audit of war*. 19th Century laissez-faire capitalism left a legacy of market failure in health, education and social policy with disastrous outcomes. The Liberal government developed a new concept of generalised citizenship, which meant that British citizens were citizens because they were British, not because they owned property.

The shameful use of workhouses for the infirm elderly, many of whom had led decent hard-working lives, was a sound place to begin social reform. State funded pensions attacked the vile injustice of the working poor ending their days in workhouses. Non-contributory pensions** meant increased taxation to pay for social justice. This was an entirely new use for taxation and deserves the epithet ‘revolutionary’. The soaring rhetoric of the new Chancellor, David Lloyd George, galvanised the political world. Lloyd George’s 1909 budget had the wealthy in its sights, raising tax for the alleviation of the poor. In a speech in Limehouse, London he said,

“It is rather a shame for a rich country like ours probably the richest in the world, if not the richest the world has ever seen, that it should allow those who have toiled all their days to end in penury and possibly starvation…..There are so many in the country blessed by Providence with great wealth, and if there are amongst them men who grudge out of their riches a fair contribution towards the less fortunate of their fellow-countrymen they are very shabby rich men”***.

It can’t be over-stated that the principle of state intervention in the well being of citizens was revolutionary. The evolution from poverty literally defining second-class status to an entitlement on the resources of the wealthy via taxation is breath taking. Lloyd George’s Liberal government was revolutionary and has shaped the perception of social justice ever since. Redistribution of wealth via taxation led inexorably to a total review of the status of the entire British people. The Old-Age Pension Act 1908 coupled with the chilling knowledge that 40% of First World War soldiers couldn’t vote due to poverty led to the Representation of the People Act 1918. The franchise was extended to all men aged over 21 and women over the age of 30 years old. Modern British democracy was born in 1908.

The Liberal government of Asquith and Lloyd George has defined modern Britain. Their vision and political courage took on the vested interests of Parliament, including their own party, to right a social evil. And it was all on behalf of people who couldn’t vote. This is politics at its finest.

*Correlli Barnett The Audit of War 1986
**The eligibility criterion was fierce. Firstly claimants had to be over 70, to have no convictions for drunkenness, and to have a weekly wage of less than £50 p.a. (the pension tapered down to zero when wages reached £75 p.a.) and the pension was 25p (five shillings) a week!
***30th July 1909.


This entry was posted in Economics, History, Politics and tagged , , , , . Bookmark the permalink.

2 Responses to The 1908 Old-Age Pension Act

  1. Peter Baxendale says:


  2. ray emmett says:


    Another great blog, very interesting

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