Discussions and proposals about pensions seem to increase in number and complexity. But for socialists the criterion by which the effectiveness of any set of proposals is to be judged would, at first sight, appear to be a simple one. Our society is characterized by gross inequalities in the distribution of wealth and income. Socialists will ask how far do the benefits to be paid to today’s pensioners, or those proposed for future pensioners, together with the methods of financing the transfer of resources involved in the payment of such benefits, contribute to the reduction of these gross inequalities of wealth and income. Having said this, however, we must recognize where the criterion leads us. To reduce inequality we must transfer resources from those who have more to those who have less. This means identifying those who have more and those who have less. Unless there are reliable indirect measures of those with ‘more’ and those with ‘less’ we may be led to a direct test—a ‘means test’—and this, historically, has become associated with second-class citizenship. In other words it has become associated with inequality of treatment of different groups or classes within the society.
Here then is another dimension of inequality. As T. H. Marshall brings out so clearly in Citizenship and Social Class ‘equality of status’ may become an independent objective of social policy and as such may at times be in direct conflict with the objective of economic equality. Certainly the emphasis of the 1948 pension legislation was upon this ‘equality of status’. Ever one was covered by the scheme; everyone was called upon to pay the same flat-rate National Insurance contribution and on satisfaction of certain contribution conditions to receive the same flat-rate pension when they reached the age of 65 (60 for women) and retired from work.
In theory this flat-rate pension should have been enough to provide a minimum subsistence income for anyone solely dependent upon it. In fact, partly because of the low levels at which the benefits were originally set (lower, it must be remembered than any reasonable measure of subsistence at that time): partly because of the fall in the value of money in the post-war period, partly because of the general increase in national income which made earlier notions of subsistence appear obsolete, this object was never realized. During the whole period from 1948 to the present day between a fifth and a quarter of all Retirement Pensioners have been obliged to apply to the National Assistance Board for supplementation of their pension. The levels of benefit paid by National Assistance are only marginally better than the Retirement Pension, and can be criticized as being below any contemporary subsistence standard.footnote1 In addition there is the fact that National Assistance, although a vast improvement over any previous system of means-test administered income-maintenance, is still out of the ‘Poor Law’ stable. It is still referred to by some recipients and potential recipients alike, as ‘Public Assistance’. I have shown that perhaps another 10–12 per cent of old people are entitled to National Assistance but are not getting it.footnote2 Some of these people undoubtedly do not apply because they do not want ‘to ask for charity’. Whatever may have been the objective of the 1948 legislation, equality of status has not been achieved in the pension field.
Could it be achieved by spending more money? The flat-rate pension could be raised to a level which would remove the majority of Retirement Pensioners from National Assistance and which would give them a ‘reasonable’ level of income (assuming that we could reach agreement on what is ‘reasonable’). The problem is that this would be an extremely costly operation involving a large increase in taxation or taking a large chunk of any resources released by a cut in ‘defence expenditure’. If, as I suggest later, there art wide differences in the economic position of the retired such a policy would involve the transfer of quite considerable sums to those already comfortably-off. We know we shall be faced with agonizing decisions about social priorities, so this might seem a high price to pay for equality of status. There emerges a strong argument for experimenting in order to find a way of redistributing income by some more acceptable method than the Assistance Board’s meanstest.
We can examine the Tory and Labour pension policies in the light of this discussion. How far do they secure adequate incomes for the old? How far are they redistributive? And how far do they imaginatively deal with the problem of the means test? The answers, as we see, may involve breaches in the principle of ‘equality of status’ in the strict Marshall sense. But it may be a lesson of modern experience for socialists that such formal ‘equality’ ought not currently to be pursued in the face of social inequalities. Indeed formal inequalities may be desirable in certain areas of welfare services as a countervailing influence against inequalities which can not or have not so far been attacked directly. For example, perhaps a higher proportion of resources should be concentrated upon the schools in which working class children are educated; or, as we might suggest in the case of pensions, a higher proportion of resources should go to poorer pensioners.