The Thatcher pension reforms and their consequences

Since the end of 2006 there has been a widespread consensus that Britain's pension system is seriously dysfunctional. The debate over the nature and extent of the 'pensions crisis,' and over ways in which it might best be remedied, has been extensive and given rise to a number of policy responses. Yet surprisingly little attention has been given to the historical roots of that crisis, or to the ways in which the historical development of Britain's complex system of public and private provision for security in old age both helped to create the crisis and constrained options for change. The reforms implemented in the 1980s marked a key moment in the development of Britain's overall system of income replacement in old age. Yet we lack any detailed historical survey of developments in that decade, and their legacy, utilising primary sources from the period. Without fully understanding the roots of the pension problem how can we solve it effectively? Lacking such an understanding we are in danger of repeating mistakes made in the past: in particular:

i) a persistent over-estimation of a) the ability and willingness of the private sector to provide decent pensions for the lower-paid; and b) the ability and willingness of consumers to finance and prioritise the necessary long-term saving over short- to medium-term consumption;
ii) a persistent under-estimation of the power of vested interests to obstruct and/or channel policy change, an under-estimation owing much to a failure adequately to understand either the nature of the vested interests which must be accommodated by policy makers or the power resources deployed them in the policy process;
iii) a failure fully to grasp the constraints placed on policy change by very long-term individual and collective contracts (both financial and political) in pensions;
iv) a continuing lack of understanding amongst both academics and policy practitioners of the political and economic cost-benefit calculations that underpin policy making in an area with perhaps the longest time-horizons of any field of policy;
v) a persistent tendency to achieve 'reform' by adding new elements to the system, thus making the system more and more complex over time.

The project proposed here will fill a significant void in our understanding. It will take advantage of the accelerated release of official and other records consequent on the government's decision to move to a '20-year rule' for document release in order to examine in detail the policy changes of the 1980s. In doing so, it will both build on and extend existing studies of postwar pensions in Britain (by, for example, Bridgen; Pemberton; Thane; Whiteside; and Thornton) and address important debates in political science about institutional development in terms of:
a) the effect on institutional development of positive feedback effects ('path dependence') that help to 'lock-in' particular institutional configurations
b) the ability of incremental change cumulatively to produce radical change
c) the impact of negative feedback in the system and its implications for both the development of the overall system and the development of government policy, and
d) issues of 'governance' and the role of non-governmental actors in the policy process.
As such, it will provide a link between contemporary historical research, political science theory, and present policy debates about the future of British pensions in the twenty-first century.

In the process, the project will:

1) Connect to the AHRC's 'care for the future' theme by linking history with present policy to address the country's 'pensions crisis' and thus, by extension, with the future welfare of pensioners.

2) Contribute to the AHRC's 'pathways to impact', aiding better policy making by enhancing our understanding of the development of Britain's system of pension provision (at once one of the most complex in the world and one of the least effective in the OECD).

Though the proposed project is a work of history it engages both with policy today and with the work of social scientists (who, if journalists are taken to produce 'the first draft of history', have come to be the writers of the second draft that contemporary historians must then assess and, as is often necessary, correct). Its principle justification is that an understanding of the reforms to the system in the 1980s , firmly rooted in a deep empirical analysis of all available sources, and of their later impact is essential if we are to understand and solve the present crisis in British pensions.

The project will utilise a number of tools for wider engagement used already in different contexts to engage with policy actors.

1. Interviews will be conducted with politicians, advisers, civil servants, business (both firms in the life and pensions industry and in relevant professional bodies such as the Institute and Faculty of Actuaries and National Association of Pension Funds), non-party political organisations (such as the Fabian Society and TUC), think tanks with an interest in pension reform, and journalists. Thereby, these actors will be drawn into a debate with the project.

2. Likewise, the proposed 'witness seminar' will draw policy actors into an engagement with the project either as 'witnesses' of policy development in the 1980s or as audience members invited during the seminar to add their views to the historical record. We aim to hold this at the Department for Work and Pensions. A full transcript of this seminar will be freely published on-line (using the University of Bristol's online 'Repository of Scholarly Eprints'), with an edited version published in a relevant journal.

3. The project conference will be aimed not just at academics but at the broad policy universe specified above, with invitations extended to a large number of such non-academic actors. The model will be an earlier very successful conference, on the history of and policy responses to the international pensions crisis, organised by the PI with others at the British Academy in 2004, and well attended by such actors. To facilitate attendance by non-academics, most of them based in the capital, the conference will be held in London. We hope once again to interest the British Academy in hosting it.

4. Past experience suggests that specialist journalists will be interested in the project's findings and existing relationships with such journalists will be cultivated and new ones developed, for example by interviewing them (several are sufficiently experienced to be primary sources in their own right) and by inviting them to chair witness seminars and conference panel discussions.

5. Project personnel will write a paper for and develop a PR strategy with 'History and Policy', an organisation that is part of the new Institute of Contemporary History at King's College London and which publishes high quality historical research freely accessible online and creates opportunities for historians, policy makers and journalists to connect. (It was via History and Policy, for example, that the PI's co-edited book Britain's Pensions Crisis: History and Policy was launched at the House of Commons with a debate, chaired by a senior Financial Times journalist, between the Minister of Pensions, a member of the Pensions Commission, and one of the editors).

6. Briefing notes will be produced and disseminated to current policy makers.

7. A project blog written by the PI, CI & RA will be developed (and later archived on Bristol's 'Repository of Scholarly Eprints') to keep interested parties in touch with its work, events, and findings. The PI will also work with the University of Bristol's press office to develop a series of press releases aimed at newspapers (both quality and 'tabloid'), technical journals and the 'blogosphere'.

8. The project's findings will be presented in the University's 'Twilight talk' series of public discussions.