§
Now I come to questions of greater general interest. Last year, in introducing the Budget, I said that this Parliament and this Government had come here pledged to social reform; and I pointed to two figures in our modern society that make an especially strong and, indeed, an irresistible appeal, not only to our sympathy, but to something more practical, a sympathy translated into a concrete and constructive policy of social and financial effort. One is the figure of the child. I reminded the House that in less than forty years—since 1870—you have added to your annual provision for the education of the children of this country out of taxes and rates an annual sum of over £24,000,000 sterling. There is not one of us who would go back upon that. The other figure is the figure of old age, still unprovided for except by casual and unorganised effort, or, by what is worse, invidious dependence upon Poor Law relief. I said then that we hoped and intended this year to lay firm the foundations of a wiser and a humaner policy. With that view, as the Committee may remember, I set aside £1,500,000, which was temporarily applied to the reduction of debt, and I anticipated that other £750,000 which, through the activity of the Inland Revenue, has been swept into the old Sinking Fund of last year, would also be available. I propose now to show how we intend to redeem the promises which I then made. I need not remind the Committee that this question in one shape or another has been before the country now for the best part of thirty years. The first schemes that were put forward proceeded on the footing either
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of compulsory or voluntary insurance, accompanied and fortified by State aid. The Royal Commission on the Aged Poor in 1895 reported adversely to all the proposals which had up to that time been made. There followed a series of inquiries into schemes for granting immediate pensions to the aged and deserving poor. There was Lord Rothschild's Committee, there was a Select Committee of this House presided over by the right hon. Gentleman the Member for Wimbledon in 1899, and there was Sir Edward Hamilton's Departmental Committee of 1900, and again a Select Committee of this House in 1903. Much valuable information was accumulated and classified in the course of these inquiries, with the result, I think, that all the material facts may now be said to have been ascertained. But up to this moment nothing has been done, nothing at all. In the meantime other countries have been making experiments. The German system, which is one of compulsory State-aided assurance, has been in existence since 1889. Under it pensions averaging a little over £6 13s. a year are paid to insured persons of the age of seventy and upwards. The State contribution amounts to less than 40 per cent. of the whole, and it would seem that in 1907 not more than 126,000 persons out of a population of over 52 millions were in receipt of old-age pensions. More instruction, I think, for our purposes is to be derived from the legislation initiated in Denmark in 1891, in New Zealand in 1898, and subsequently in New South Wales and Victoria. These systems, though differing widely in their details, have several important features in common. In the first place, they do not depend for their application upon either voluntary or compulsory contribution on the part of the pensioner. In the next place, they are limited in all cases to persons whose income or property is below a prescribed figure; and, thirdly, in all cases they impose some test or other varying in stringency and in complexity, of character and desert in regard to such matters, for instance, as past criminality or pauperism. Although both in Denmark and in New Zealand the expenditure upon the pensions has, in the course of time, exhibited a tendency to increase beyond the original estimate,
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yet the cost of administration has turned out to be relatively small, amounting in New Zealand in 1907 to not more than 1.67 per cent.; and I think I may say that in none of these communities is there any dissatisfaction either with the principles or with the working of the law, and certainly no disposition to go back to the state of things which prevailed before old-age pensions were set up. His Majesty's present Government came into power and went through the last general election entirely unpledged in regard to this matter, not that they were insensible to its importance or to its urgency, but they felt it right to enter into no binding engagement until they had had full time to survey the problem in all its aspects, and—what is still more important—to lay a solid financial foundation for any future structure it might be possible to raise. It was accordingly not until we had seen our way to make some substantial provision for the reduction of the national liabilities that I found myself able to announce in the Budget of last year that this year it was our intention to make a beginning—and more than a beginning I never promised—in the creation of a sound and workable scheme. I have sometimes seen pledges and assurances on this subject rather misinterpreted, and I may in passing just refer to what on two occasions, speaking for myself and for the Government, I said upon the subject. First in the debate on the Address on 13th February, 1907, I said this:—
I am as anxious as the hon. Gentleman"—
one of my hon. friends, I think, below the gangway opposite—
—"to make a start. Let me say I have long since come to the conclusion that it is not necessary, I am not sure that it would be either expedient or politic, to proceed by what I may call a direct frontal attack and attempt to take the whole position with a single blow. I believe on the contrary you will have to proceed more or less tentatively and by stages.
Later on I said—
Speaking for myself and the Government, there is no object within the sphere of social reform we are more desirous to have a share in bringing about than the starting of a really effective scheme, even though it be on a small and limited scale, on lines socially and financially sound, for further development.
I repeated the same statement in opening the Budget last year in language which
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is on record, and which I need not now repeat.
§ Let me pause to say that there is one governing consideration which in framing our proposals we have kept steadily in view. The problem of making better provision for the aged is only one of a group of questions the settlement of which, although it cannot be simultaneous, should as far as possible be harmonious and self-consistent. A Royal Commission, as the Committee is aware, has now been at work for some time investigating the administration of the Poor Law, and we understand that its Report may be expected before many months. Without in any way anticipating what, of course, we do not know—namely, the character and extent of the recommendations of that Commission, I think we may assume that it will give effect in some shape or other to what has long been regarded by careful observers as the most urgent of all reforms—namely, the reclassification of that vast heterogeneous mass of persons, young and old, sound and infirm, underserving or unfortunate, who at present fall within one province or another of the area of Poor Law administration. It appears to the Government to be a preliminary specially necessary in itself—and reasonably certain not to clash with any wider proposal which the Commissioners may make to take the care of the aged and place it once for all outside both the machinery and the associations of our Poor Law system.
§ Having referred to these general considerations let me come to rather closer quarters with the actual problem. We have had to consider this matter very carefully, and the first conclusion at which we arrived, and as to which I do not think there will be any really serious difference of opinion in this House, was that all so-called contributory schemes must be ruled out. They do not meet the necessities of the case. If the contribution which is to be the condition of a pension were left to the option of the would-be pensioner, the assistance of the State might be confined to a comparatively small class, and that not by any means necessarily the most necessitous or the most deserving class. On the other hand, if it, were sought to 467 make the contribution compulsory with no practical machinery in this country—whatever might be the case in Germany—by which it could be worked, you would certainly have to face the hostility of many other competing bodies like the trade unions, friendly societies, insurance companies, and a host of others. Moreover—and this in itself, though not an argument against the merits of a contributory scheme, is conclusive against it as a solution of the problem, or an attempt to solve the problem—none of its benefits would come into actual enjoyment until after the lapse of twenty or more years. The best statement you can find, and it is not only cogent, but conclusive, of the objections to a contributory scheme from the point of view of practical politics and the actual exigencies in our own British social and economic life, is to be found in the speech of the right hon Gentleman the Member for West Birmingham, delivered in this House on 22nd March, 1899. I refer everybody to that speech who wants as lucid and as forcible a statement as can be made of the overwhelming objections to such a scheme. It is well known that the right hon. Gentleman favoured the contributory principle at one time, and this speech represents his considered views after he had carefully studied the whole problem and realised its difficulties. The next, what is called the universal scheme, associated with the name of Mr. Charles Booth, is also out of the range of practical politics. The actual working cost of such a scheme is problematical, because no one can tell in advance how many of the people legally entitled would fail or decline to claim their pensions, nor is there any reason why that proportion should remain constant from time to time. The possible cost, as distinguished from the actual, might vary according as seventy or sixty-five was selected as the qualifying age, from £16,000,000 to something over £27,000,000—figures which are obviously prohibitive. It is, at any rate, certain that under such schemes pensions would be claimed and received by those who had no right to them from any view of necessity or desert. A further point is that in our view the obligation to provide the pension must, as between the State and the pensioner, rest on the Treasury and not 468 on the local authority. The objections to any other plan are grave and insuperable. It is sufficient for the moment to point out that to make the charge a, local burden would first of all lead to every inequality and make large differences between place and place as the proportion of the aged poor to the whole population varied. It would reintroduce the terrible evils of the old laws of settlement and bear most heavily on the most necessitous districts. The Government are clearly of opinion that, as between the State and the pensioner, the obligation must rest on the State and the Treasury. It must not, however, be left out of account that the saving to local rates in respect of poor relief, which will result from a system of State pensions, ought in the long-run to be considerable, and account will of course have to be taken of this in future adjustments of the Exchequer contributions in aid of local rates. But that will not affect the position as between the State and the pensioner.
§ It follows from these considerations that any practical scheme must be based on some kind of discrimination—by which I mean upon the ability of the claimant to comply with certain qualifying conditions. Those conditions resolve themselves into four distinct categories—age, means, status, and character. As to age—sixty, sixty-five, seventy, and seventy-five have all been put forward as the minimum age. In New Zealand and Australia sixty-five is the age. In Germany seventy. As to means, this, of course, is a necessary basis of any scheme that proceeds by way of discrimination. The means of the applicant may be taken into account in one or in both of two ways—either as an absolute disqualification or as pro tanto reducing the amount of the pensions. In New Zealand both tests are applied. The possession of an income of £60, or of property of the value of £200, disqualifies, and the amount awarded is limited to such sum as will not bring the total income above £60 a year, £1 being deducted in respect of every £10 of capital value of property. In Denmark, private income up to £5 10s. a year is left out of consideration, and the amount of the award is calculated according to the needs of the applicant. In this country, the Reports of the 469 Committees of the right hon. Gentleman the Member for Wimbledon and of Sir Edward Hamilton disqualified all persons whose income from any source exceeded 10s. a week, that is to say, £26 a year. What does that mean? The actual result in figures of the 10s. disqualification for the year 1907, and for the whole of the United Kingdom, is as follows. I will take two cases—persons over sixty-five and persons over seventy. Of persons over sixty-five, the total number was 2,116,267. Deduct the number with incomes over 10s. a week, which is 778,283, that would bring the total pensionables to 1,337,984. Of persons over seventy, there were 1,254,286. Deduct the number with incomes of 10s., which was 393,405, that brings the total pensionables to 860,881. But all these figures I would point out are in the highest degree conjectural.
§ Then as to status. It will be common ground that any scheme should be confined to British subjects, and as naturalisation in this country is on the whole cheap and easy, it will be necessary to add as a qualification either ten years, or twenty years if you like, residence in the United Kingdom. Under this heading criminals and lunatics must also be excluded. By criminals, I mean persons actually under sentence. The deduction on this account is very small—about 1½ per cent. A more serious question is how far the status of pauper is to be regarded as a disqualification for a pension. In Denmark, the receipt of Poor Law relief within ten years disqualifies for pension. The right hon. Gentleman's Committee fixed it at within twenty years. Most of the Bills which have been introduced have made similar suggestions. I may say at once that the Government do not take that view. It is a very hard thing and a very unnecessary thing to make the mere fact of receipt of Poor Law relief during twenty, ten, or even within five years an absolute disqualification. We propose, therefore, and this is provisional, for the whole thing is necessarily experimental in the first year and subject to revision as experience is gained, to exclude in the first year actual paupers, that is, persons actually in receipt of Poor Law relief, and not to go back ten 470 or fifteen years. We do not go back on the past.
§ As character, I think the less you go into that question, short of actual conviction for crime, the better. All those suggested tests which look so well on paper, thrift, prudence, good repute, etc., when you put them into a concrete shape, are not only extremely difficult to apply, but in their application produce cases of unwarrantable hardship. Subsequent misconduct, of course, is a totally different matter. I am speaking now of past character. Having run through these various heads, let me again trouble the House. I will take the case of persons over sixty-five years and persons over seventy years. Persons over sixty-five years, as I have already said, number 2,116,000. If you deduct those with incomes over 10s. a week, as I have already done, the number is 778,000; aliens, criminals, and lunatics, 33,000; and paupers, 368,000, or a reduction to a total of 1,179,000, leaving the total of pensionable persons at 937,000. The number of persons over seventy being taken at 1,254,286, and making similar deductions, you get a total of pensionable persons of 572,000. Here, again, the figures are very conjectural. That is the best estimate that we can make, and we must not be held too closely to it, if experience shows different results.