1960s >> 1969 >> no-775-march-1969

Now Mr. Crossman Re-organises Poverty

If the Beveridge Plan had worked there would have been no need for Labour’s White Paper National Superannuation and Social Insurance presented by Secretary of State for Health and Social Security Crossman at the end of January. For the aim of Beveridge’s National Insurance scheme was to abolish destitution and “make want under any circumstances unnecessary”. Now Labour admits that this reform which they themselves brought in in 1948 has failed. Beveridge had proposed that, in return for twenty years contributions, workers would have “earned” (could get without submitting to a prying means test) a pension that would at least be above the breadline. The post-war Labour government, however, introduced full pensions at once but these have always been below the official poverty line of National Assistance rates. In 1965, says the White Paper, a survey showed that if this had been only £2 higher “about three quarters of all pensioners would have been within the scope of national assistance”. It explains:

When the national assistance scheme came into operation in 1948 its levels (including allowances for rent) were in most cases substantially above the level of national insurance pensions and benefits. From the start, therefore, hundreds of thousands of old people needed to supplement their national insurance pension with an allowance from the National Assistance Board. Supplementation had become the rule for those with little or no other income —not, as Beveridge’s ultimate objective, the exception. This situation has persisted ever since.

Labour has no alternative but to admit:

It is clear in retrospect that the national insurance scheme, as it has developed over the last 20 years, has failed to achieve Beveridge’s main objective — adequate pensions and other benefits by right of contributions.
Beveridge and National Insurance have, in other words, failed to solve the problem of destitute old workers.

Let us pause for a moment and see why capitalism creates a poor relief problem. Under capitalism wealth is class owned and produced for sale so that if you want anything you must have the money to buy it. This presents no problem for those who own the means of wealth production since they get a free income as rent, interest and profit merely because they are the owners. It certainly severely restricts the choice of workers in jobs but at least they have their wages. But what about those with no property and no job—workers who are unemployed, sick, disabled or old? The government cannot really let them starve (at least not too quickly or obviously since it is not unknown for people even in Britain to die of starvation) and must make some provision for them if only to avoid bread riots. Over the years the poor relief has changed many times from the old Poor Law to so-called Social Security (a misnomer since it’s neither social nor secure). Whether the payments are made nationally or locally or after a means test or paying contribution for years their aim is the same: to provide those who would otherwise be destitute with an income however low.

Beveridge was commissioned in 1941 to report on the whole Poor Relief system. It only took him a year as the promise of “abolishing want” was needed as war propaganda. It has taken this Labour government somewhat longer as it is now over four years and three Ministers since they were elected and began their review. In November 1965 Wilson was speaking of “our proposals which will follow next year as a result of the searching review we are conducting of the social services”. But in 1966 the plea was again “next year”, and also in 1967, and again in 1968. This long delay had nothing to do with difficulties in finding whatever they were searching for. This was clearly one of those reforms sacrificed as Labour gave priority (as it had to) to cutting workers’ living standards in order to secure foreign loans to help British capitalists solve their trading problems.

Labour first mooted the idea of earnings-related poor relief in 1957 in a pamphlet National Superannuation. The next year the Tories pinched Labour’s programme and brought in their own earnings-related scheme (providing full benefits only after 2000!). The Labour Party denounced this as “the Tory swindle”, a cry that was heard from their platforms up and down the country. The substance of their case was based on the illusion that national insurance contributions are a burden on the workers. The Tory plan, they said, aimed at making workers pay a larger share of the cost of their pensions.

It is true that workers do pay insurance contributions and taxes (though with PAYE they don’t have much choice) but it is not true that these are a burden on the working class. It is take-home pay which fixes how workers live and which they seek to maintain and improve. An increase in PAYE deductions as a decrease in take-home pay encourages workers to demand wage increases sooner and bigger than they would have. The Labour government realises this and their pension scheme, with its increase in contributions, can be seen as a bid to reduce workers’ living standards so that the capitalist state can have more money to spend on relief of the aged poor. Crossman has frankly declared that if workers demand higher wages to compensate for higher contributions the whole scheme will be “wrecked”. He is confident, however, that he can trick workers into agreeing to lower standards to help the financing of State poor relief.

The White Paper contains the amazing assertion, with no evidence, that “people do not want to be given rights to pensions and benefits; they want to earn them by their contributions”. There was a time when Labour used to argue that, as destitution in old age was not the responsibility of the workers but of capitalism, the cost of pensions should be borne by the state and the employers alone. The delusion of earned pensions, first created by the Tories in 1925, serves a dual purpose: it saves the state administrative troubles in sorting out who are the deserving poor and it serves to trick unwary workers into forgoing wage increases today for jam tomorrow.

Workers would be most unwise to fall for this though many, being unaware of their class position and of the possibility of Socialism, will find “National Superannuation” attractive. Surely, they will say, this is not something socialists can oppose?

We have already touched on part of the socialist case on reforms (they usually fail in the long run; they have to take second place to profits; they are stolen by openly capitalist parties). We can now go a little further. Of course socialists are in favour of workers who are off work, or retired, getting as much as they can from the state. But we do not campaign for higher pensions or sick pay, because we think that advocating reforms is a hindrance to the growth of the movement for Socialism (where those unable to work will present no problem since, with the disappearance of money, everybody whether working or not will have free access to what they need). For a Socialist party to advocate reforms is to run the risk of winning support for the reforms rather than Socialism and so of degenerating into just another capitalist reform party. Also, as the movement for Socialism grows so will capitalist governments be more willing to make reforms, so that the best way to get reforms is not to campaign for them as such but to campaign for Socialism. As the experience of the reformist Labour Party shows, if you ask for only half-a-loaf you’ll only get a few crumbs or perhaps a third-of-a-loaf. In this respect, it is significant that the proposals in the White Paper are less generous than what Labour promised both in their original 1957 plan and in the 1964 election manifesto.

There will always be the problem of old workers under capitalism and the state will have to devise some way of mitigating it. Labour’s “National Superannuation” aims to do this by reducing the take-home pay of the higher-paid so as to relieve the state of some of the burden of national assistance (now “supplementary benefit”). What we said about Beveridge in 1943 still applies.

The Beveridge proposals will not solve the poverty problem of the working-class. They will level the workers’ position as a whole, reducing the more favourably placed to a lower level and putting the worst placed on a less evil level. This is not a ‘new world’ of hope, but a redistribution of misery
(Beveridge Re-Organises Poverty).

Though one commentator, G. D. Gilling-Smith, has questioned whether Labour’s plan will in fact mean very much to the lowest-paid:

 Last but not least, this is not a scheme for the poor or for those who have already retired. There is to be a guarantee to review pensions for those already retired on a regular two-year basis but this merely puts on the Statute Book a practice that has already been carried out by successful Governments since 1948.
If you earn less than £1,000 and your State pension does not meet your needs, you will still be able to seek an allowance from the Supplementary Benefits Commission, the successor of the National Assistance Board. For you the new scheme offers little except perhaps a slight reduction in National Insurance contribution levels at lower wages (Daily Telegraph, 29 January 1969).

It is not hard to see that Gilling-Smith is right when he says that under the new scheme there will still be some applying for further aid. For the basic pension formula is: 60 per cent of your earnings up to half “national average earnings” plus 25 per cent of the remainder up to one-and-a- half “national average earnings”.

The White Paper takes as “national average earnings” the figure for earnings of adult male manual workers in manufacturing and certain other industries (now £22 a week). They explain that this is used for “convenience”. Very convenient, yes, especially as this figure is way above the real national average! The Socialist Standard has many times exposed this figure as a fraud as it excludes many of the lowest-paid workers such as those in agriculture and catering. It also excludes women. The true national average is nothing like £22. Of course, if the government use this figure so much the better (it will mean that, in asking for more, higher-paid workers instead of “wrecking” the scheme will be getting bigger pensions for everybody, or perhaps that’s what Crossman means!) However, nowhere do they say they will and we suspect they’ll find some excuse for using a lower figure.

Nevertheless, even on their own figures we can show that people will still be below the breadline. Take someone whose earnings are £11 (half the alleged national average), the government’s figures say that after twenty years he would get a pension of £6.12.0 a week. The poverty line for a single pensioner is now £5.1.0 plus rent. So if your rent is above 31s. you could still get supplementary benefit. And there are many who get less than the £11. For instance, even in manufacturing industry average earnings for women aged 18 and over are only £10.19.0. And two-thirds of pensioners and 7 out of 10 of those of pension age on national assistance are women. Women are certainly going to need the “new deal” also promised in the White Paper!

National Superannuation is a reform in the organisation of poor relief made necessary by developments within capitalism, not least the continual rise of prices that has gone on since 1940 caused mainly by the currency policies of all governments.

Adam Buick