State Pensions and the Growth of Social Welfare Expenditure

Abstract

ABSTRACTThe enormous growth of state expenditure in advanced industrial societies during the thirty years after the second world war is widely acknowledged and many attempts have been made to account for the phenomenon. Most of these explanations, however, either isolate specific factors or are applicable at a very high level of generality and so make it difficult to develop a wider understanding of the growth of the modern welfare state. This article is predicated upon the assumption that one way to overcome this difficulty is to identify, and evaluate the importance of, the different factors which have stimulated the growth ofspecificprogrammes rather than aggregate expenditures. It examines the growth of state spending on national insurance pensions in the United Kingdom between 1951 and 1978, therefore, because this is the most expensive of all social programmes. The primary purpose of the article is to identify, discuss and assess the relative importance of the most important causal factors which account for the growth of spending on pensions. This analysis is based upon the decomposition of the growth into its most important constituent parts. An attempt is also made to employ multiple regression to investigate changes in the real rate of basic pension, but the conclusion reached in this particular case is that it is a poor substitute for historical case studies. Finally, some speculative thoughts are advanced about possible future trends in spending on basic state pensions.