III.—State Pensions for the Aged.

The Poor Law Commissioners did not, in their great Eeport of 1834, recommend the withdrawal of outdoor relief from the aged or the infirm. The common impression that they advocated the total abolition of outdoor relief is incorrect. The whole drift of their conclusions is against any subsidy in aid of wages; but they did not regard collective provision for old age as any real allowance in aid of wages, in the sense of wages being likely to be higher if no such provision were made. Modern political economists cannot do otherwise than confirm this view.

No determined attempt has accordingly been made, except in London, Manchester, and a few other places, to abolish outdoor relief to the aged; and the statistics already quoted appear to prove that at least one-fifth of the people who attain the age of sixty-five are compelled to resort to the relieving officer for that bare subsistence upon which they linger out their lives.

Nothing can be more discouraging to provident saving, even where it is possible, than our present practice in such cases. When a man is absolutely destitute we provide for him a bare subsistence. If he can manage to save, by the time he is sixty-five, as much as £150, he can provide for himself and wife practically as well as he and she would be provided for if they had saved nothing at all. Once past that minimum, there is every inducement to save which "gentility" and independence can offer. Anything short of that minimum is virtually useless. Poor Law relief cannot legally be given except to the absolutely destitute; and the aged domestic servant, or farm-laborer, who has accumulated £50, must dissipate page 8 that small hoard before his future will be secured from want.^* The man who has a shilling a week from his friendly society is legally no better off than he who has nothing.^† Both must be just kept alive, and legally neither can demand more.

Now the virtual minimum which enables an aged couple to dispense with poor law relief is far beyond the reach of a large proportion of the population. Instead, however, of encouraging them to save as much as they can towards their support, we, in effect, discourage them by making them no better off than those who save nothing at all.

Would it not be better frankly to recognise the provision of a minimum pension for old age as a collective charge? Every person must necessarily pay rates and taxes in one shape or another all his life long. It seems desirable to promote in every way the feeling that "the Government" is no entity outside of ourselves, but merely ourselves organised for collective purposes. Regarding the State as a vast benefit society, of which the whole body of citizens are necessarily members, the provision of pensions to the aged appears to be an obvious expansion of the Democratic idea.

At present we give a superannuation allowance to about 160,000 retired civil servants, military and naval officers and men, policemen, postmen, &c. The system is being extended to elementary school teachers and nurses. In all these cases the pension is given practically as a matter of right; it is granted in addition to whatever may have been saved by the recipient; and it carries with it no stigma of public disgrace.

We also give what are virtually superannuation allowances to 250,000 aged paupers, besides workhouse accommodation to 75,000 more. In their case the pension is awarded as of grace; it is only awarded where there are no savings, or where the savings have been consumed; and it is accompanied by public opprobrium and legal disqualification for the duties of citizenship.

The result in the first case is to encourage thrift and saving to supplement the pension, without the slightest demoralisation of character. The result in the second case is absolutely to discourage thrift and saving, and to break down whatever character had survived the losing fight of life. If we intend to give pensions to our aged poor, as we virtually now do, had we not better do so m suco a way as to improve rather than to injure their character, and in a

^* A domestic servant who, with incredible perseverance and patience, had saved up some £60 or £70, found this little board gradually melting away in her struggle to maintain her respectability, and appeared before the whitechanel Board of Guardians with the balance asking what she should do. Legally, the board could have given no relief until the amount was dissipated. Ultimately an adequate annuity was privately purchased for her, the extra sum required being fount) by subscription.

^† So absurd is this legal discouragement of saving, that a practice is growing up of allowing half of any such pension to benefit the pauper thus,--if he has two shillings a week from his club, the normal relief is reduced only by one shilling. This illegal expedient is connived at by the Local Government Board.

page 9 manner calculated to promote rather than to discourage their own efforts to provide for their old age?

This proposal, though it is essentially one for National Insurance, must not be confounded with the current schemes which bear that name. The poor of this country will never vote away the poor-rate. No Government is at all likely to attempt to collect compulsory insurance premiums from men already supporting their trade-unions and friendly societies, their benefit clubs and their building societies, and paying, moreover, a not inconsiderable poor-rate. Nor is there any reason for any such collection. The expenditure and the revenue sides of the Budget ought economically to be kept distinct. If aged pensions are desirable let us have them. When the funds come to be raised, let it be done according to the classic economic maxims of taxation. It is pretty clear that these maxims will yield no support to the imposition of what would be virtually a new poll-tax.

The Rev. W. Moore Ede suggests^* that certain payments might be required from the recipients of the aged pension as a test of thrift, and a means of improviing character. Without for a moment countenancing the heartless hypocrisy which recommends "thrift" to men who are in deplorable need of more money to spend on the immediate well-being of their families, Mr. Ede may have good reason to think that reform may most easily begin by granting aged pensions at first only to those persons who can show that they have made some attempt partially to provide for their old age. At present such persons often end their days in the workhouse. A large number of those compelled in their old age to resort to this refuge for the destitute have made ineffectual efforts at thrifty provision for their declining years. In 1881, out of 183,872 inmates of workhouses (one-third being children and another third women) no fewer than 11,304 had been members of benefit societies. In 3,913 cases the society had broken up, usually from insolvency.^† A better arrangement can surely be made. The possession of small savings, continued subscription to a friendly society or club, life insurance, or lengthy membership of a trade-union, co-operative or building society, might all be accepted as relevant evidence of providence. But the object of the measure would be defeated unless the thrift condition were made easy enough to be satisfied by the poorest class of laborers, of merely average foresight and strength of character. At present we fail to encourage thrift because we stigmatise all as semi-criminals who fall below a quite impossible standard. If we really desire to comfort and help the weak-hearted, and to strengthen such as do stand, we must pitch our requirements so as to be within reach of their attainment.

It will at first be contended by members of the Charity Organisation Society on the one hand, and by the officials of friendly societies on the other, that any such public provision of honorable pensions would seriously discourage and thwart the efforts now being made to create private superannuation funds. There is, hcwever, good reason for supposing that this would not be the case. At present these efforts are hindered by the futility of subscribing for anything short of a pension adequate for maintenance.^* Anything less than this amount merely goes in aid of the rates, by reducing the amount of relief required. But once let the public pension be independent of other means, and it will become worth while to subscribe for an annuity of even sixpence per week. The great hindrance to saving at present is the hopelessness of being able to save enough. With a minimum pension assured, even the smallest addition becomes worth providing. If membership of a friendly society or a life insurance policy carried with it almost a certainty of an honorable State pension, instead of degrading Poor Law relief, the strongest possible encouragement would be given to the admirable efforts now being made by the existing popular agencies for saving which are already doing so much for the more prosperous of our artisan classes. At present they do not succeed to any extent in providing for old age. Their benefits for sickness absorb practically all the available savings of the poor, The cost of providing adequate pensions is found to be too serious for the great friendly societies, and for any but a few of the more powerful trade-unions. The financial equilibrium of some of these is more than doubtful. But small additions to the public pension could at once be made attractive to tens of thousands who could never aspire to obtain even ten pounds a year.

There is a further direction in which these public pensions would encourage individual effort and social sympathy. Nothing is more brutalising than the manner in which the grown-up children of paupers are virtually encouraged to treat their aged parents. The Guardians have the greatest possible difficulty in obtaining contributions from sons towards the maintenance of their pauper parents. The money is given grudgingly, because it merely saves the rates. But once let it become possible for the poor, as it is for the middle-class and the rich, to soothe and comfort the declining years of their parents by those small gifts which cost so little and mean so much, and we may have at least a chance of awakening those filial feelings which go far to humanise and elevate personal character. If a son s assistance to his State-pensioned father or mother means the addition of tobacco or tea to their bare subsistence, that assistance is a

^* "The Manchester Unity has long desired to establish annuity or superannuation benefit funds; to commence at sixty-five is recommended, and not less than 5s. per week. The cost of such a benefit has hitherto proved deterrent." (Evidence of Mr. Watson, actuary to Manchester Unity of Odd Fellows, before Committee on National Insurance, H.C. 270, 1885, p. 66.) "After two years only four members had joined the fund." (Evidence of Mr. Holmes, a director, p. 59.)

page 11 great deal more likely to be given than when it means merely the reduction of his parent's cost to the parish. At present we deliberately dry up and starve the higher feelings of the poor.

Some persons will be frightened at the cost of providing any widespread system of aged pensions. It must, however, be remembered that the proposal involves really no new expense to the community. The aged poor are in any case maintained at the cost of the able-bodied workers; and the substitution of pensions for Poor Law relief is merely a readjustment. It may be assumed that in the United Kingdom to-day there would be about 1,700,000 persons over sixty-five. Of these probably 150,000 already receive public pensions of one kind or another, and about 325,000 are in receipt of Poor Law relief, costing on an average £10 10s. 10¾d. each annually.^* What proportion of the others would be eligible for and would apply for a pension it is impossible to predict. If the pension of £10 per head were made universal the extra cost involved would be covered by less than a quarter of the yield of a re-assessment of the present (nominal) four shillings in the pound Land Tax.

If the pension were made payable at seventy years of age, only 22/3 per cent. of the population would be alive to claim it, or just a million for the United Kingdom, of whom probably 250,000 are already paupers, and perhaps 100,000 public pensioners. The extra charge involved would, in this case, not exceed threepence in the pound on the Income Tax.

But a beginning might be made by sanctioning a certain number of pensions every year, within a fixed limit, the number being gradually increased so as to absorb more and more of those who would otherwise end their days as paupers. It must never be forgotten that the object of the pension system is not only the comfort of the individual pensioner, but also the stoppage of the degradation and demoralisation of the existing pauper class. The main object is to avail ourselves of the salutary aspect of individual responsibility by removing the present hopelessness. We must put some water into the pump in order to make it draw.