OCR Specification focus:
‘Old Age pensions; National Insurance; measures to protect workers.’
Between 1906 and 1914, the British government introduced pioneering welfare reforms that addressed poverty and insecurity through pensions, national insurance, and workplace protections.
The Context of Early Welfare Reforms
At the start of the 20th century, Britain faced widespread poverty, unemployment, and insecurity among working people. Studies by Charles Booth and Seebohm Rowntree highlighted the extent of deprivation, showing that many fell into poverty due to illness, unemployment, or old age. The Liberal Government, influenced by New Liberalism, aimed to address these issues and promote national efficiency.
The Role of New Liberalism
New Liberalism represented a shift from traditional laissez-faire principles. Politicians like David Lloyd George and Winston Churchill believed that the state had a duty to intervene where individuals could not protect themselves. This philosophy underpinned early welfare legislation and justified government expansion into social reform.
Old Age Pensions
In 1908, the Liberal Government introduced the Old Age Pensions Act, a landmark reform providing regular payments to the elderly.
Pensions of 5 shillings a week for individuals over 70.
Available only to those with incomes below a set threshold.
Excluded those who had not worked regularly, had been in prison recently, or were considered ‘undeserving’.
Old Age Pension: A state-provided weekly payment introduced in 1908 to support elderly citizens who could no longer work.
This measure was revolutionary because it offered non-contributory pensions, funded by taxation, rather than through prior contributions from workers. However, the age limit meant many labourers died before qualifying.
“The Old Age Pensions Act (1908) introduced a non-contributory pension of 5s a week (7s 6d for couples) for those over 70, paid through local post offices.”
Queue of pensioners receiving the first old-age pensions at a Post Office, 1 January 1909. The Act’s administration through post offices helped avoid Poor Law stigma and ensured national reach. This image is period evidence of the scheme in action; the host page also notes its original publication source. Source
National Insurance
The National Insurance Act of 1911 created a more systematic approach to social welfare. It was divided into two key parts.
Part I: Health Insurance
Applied mainly to workers in low-paid industries earning under £160 a year.
Compulsory contributions:
4d from workers,
3d from employers,
2d from the state.
Benefits included:
Free medical treatment from a panel doctor.
Sick pay of 10 shillings a week for 13 weeks, then 5 shillings for a further 13.
A maternity benefit of 30 shillings for married women.
National Insurance (Part I): A contributory system introduced in 1911, providing medical treatment and sick pay for workers earning under £160 annually.
“Under the National Insurance Act (1911), benefits were funded by worker, employer and state contributions and administered via approved societies or local insurance committees.”
Cover of a National Health Insurance contributions book (1912–14) stamped for St Iltutus Lodge, Llantwit Major. Insurance books recorded the insured worker’s membership of an Approved Society and validated paid contributions with stamps. This precisely illustrates how the 1911 Act operated at ground level. Source
Part II: Unemployment Insurance
Designed for workers in seasonal and unstable industries such as shipbuilding and engineering.
Contributions: 2½d each from worker, employer, and government.
Provided unemployment benefit of 7 shillings a week for up to 15 weeks.
Initially covered around 2.25 million workers.
This represented the first state-backed unemployment protection scheme, but coverage was limited to specific industries.
Measures to Protect Workers
Beyond pensions and insurance, the government passed legislation to improve workplace conditions and safeguard vulnerable groups.
Trade Boards Act 1909
Established boards to set minimum wages in industries notorious for low pay, such as tailoring and box-making.
Initially applied to about 200,000 workers, mainly women.
Marked an early attempt at state intervention in wage regulation.
“The Trade Boards Act (1909) established minimum wage rates in four ‘sweated’ trades and created boards with equal representation to fix and enforce them.”
Photograph of chainmakers’ workshops at Cradley Heath, where poorly paid piece-work by women typified sweated labour before 1909. The Trade Boards Act targeted precisely these trades by setting enforceable minimum rates. The image illustrates conditions the reform intended to remedy. Source
Shops Act 1911
Gave shopworkers the right to a half-day holiday each week.
Addressed the long hours endured by retail employees.
Workmen’s Compensation Act 1906
Extended compensation rights for workers injured at work.
Made employers liable for accidents even if negligence was not proven.
Workmen’s Compensation: Financial compensation paid to workers injured during employment, introduced to ensure protection without requiring proof of employer negligence.
These protective measures reflected growing recognition of the need for basic rights and safeguards for workers in vulnerable sectors.
Impact and Limitations of Early Welfare Reforms
The welfare reforms between 1906 and 1914 marked a turning point in state responsibility for social welfare.
Achievements:
Introduced the principle of collective responsibility for poverty relief.
Laid the foundation for later welfare state developments.
Directly improved the lives of millions of workers and the elderly.
Limitations:
Many benefits were modest and failed to lift recipients out of poverty entirely.
Pensions were inadequate, especially with the high cost of living.
National Insurance excluded large sections of workers, such as agricultural labourers and many women.
Welfare policies retained a moral dimension, excluding the so-called ‘undeserving poor’.
Despite limitations, these reforms demonstrated that government could take active responsibility for social security, paving the way for more comprehensive welfare policies after 1945.
FAQ
The Act was financed through general taxation, which some critics viewed as a burden on the middle and upper classes.
There was also opposition from Conservatives and some employers, who feared it undermined self-reliance. Despite this, the Liberals believed it would secure working-class support and demonstrate their commitment to social justice.
Friendly Societies were mutual aid organisations where workers pooled contributions to support members in times of illness or death.
However, their coverage was limited, uneven, and often excluded the poorest. The National Insurance Act of 1911 was partly designed to standardise this system and extend protection more widely, reducing reliance on voluntary associations.
The scheme targeted workers in regular employment and in low-paid industries.
Groups excluded included:
Agricultural labourers
Many women in casual work
Self-employed workers
The government believed covering all workers would be administratively impossible and financially unsustainable at the time.
The Act shifted responsibility towards employers, making them liable for workplace injuries regardless of negligence.
This encouraged employers to take safety more seriously, as workplace accidents now had direct financial consequences. It also reflected a move away from individual responsibility to shared responsibility between labour and capital.
Some employers argued that legally enforced minimum wages would raise costs and reduce competitiveness.
They feared businesses would either pass costs to consumers or cut jobs. Yet reformers insisted that the ‘sweating’ system was morally indefensible and economically inefficient, leading to its passage despite industry protests.
Practice Questions
Question 1 (2 marks)
In which year was the Old Age Pensions Act introduced, and what was the minimum age at which a pension could be claimed?
Question 1 (2 marks)
1 mark for identifying the year correctly as 1908.
1 mark for identifying the minimum age correctly as 70.
(Maximum 2 marks)
Question 2 (6 marks)
Explain two ways in which the Liberal government’s reforms between 1906 and 1914 sought to protect workers.
Question 2 (6 marks)
Award up to 3 marks per explanation.
Explanations must describe both the measure and how it offered protection.
Indicative content:
Trade Boards Act (1909): Set minimum wages in ‘sweated’ industries, protecting workers from exploitative pay. (Up to 3 marks)
Shops Act (1911): Guaranteed shopworkers a half-day holiday each week, reducing excessive hours. (Up to 3 marks)
Workmen’s Compensation Act (1906): Ensured injured workers received compensation without needing to prove employer negligence. (Up to 3 marks)
Level descriptors:
1–2 marks: Identifies a reform but with limited or no explanation.
3–4 marks: Describes at least one reform with some explanation of how it protected workers.
5–6 marks: Explains two reforms clearly, with developed points on how they improved conditions or safeguarded workers.
