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Labour and Conservative change

Labour and social policy

During its period in opposition between 1951 and 1964, social policy became increasingly central for the Labour Party. In spite of the new benefits system, sociological studies still revealed the presence of poverty. Labour social policy strategists believed that flat rate contributions were the major weakness in William Beveridge's plan for social security. Richard Crossman was responsible for working out a plan for earnings-related social security contributions. Harold Wilson's Labour government therefore concentrated on reforming the way National Assistance was used to supplement pensions. Crossman's plans for an earnings-related pension were shelved and the flat-rate pension was increased in March 1965.

In 1968, Wilson appointed Crossman as Minister for the newly formed Department of Health and Social Security. He resumed work on an earnings-related pension scheme, National Superannuation, producing a White Paper and the National Superannuation and Social Insurance Bill. Labour was defeated in the 1970 election, causing the bill to fail.

Conservative pension shift and defeat

The Conservative Minister of Health and Social Security, Sir Keith Joseph, intended the responsibility for the provision of pensions to be shifted from the state to the employer. According to Joseph's scheme, flat rate contributions were to be replaced by earnings-related contributions collected through the Pay as You Earn tax system. Pensions and other national insurance-related payment would be related to earnings. His proposals were incorporated in the Social Security Act of 1973, which was not implemented, as the Conservatives were defeated in the 1974 election. Joseph also intended to made provision for increases in pension payments.

State Earnings Related Pension Scheme

In 1975, Labour introduced the State Earnings Related Pension Scheme (SERPS). State pensions now consisted of a basic amount, but with an additional element which was related to recipients' earnings before retirement. Payments would also rise in relation to the level of earnings more generally. SERPS was implemented in terms of the Social Security Pensions Act of 1975. Most women were now required to pay full national insurance contributions.