The current economic climate may seem tough, but the Queen’s accession year of 1952 saw much more real hardship in the aftermath of the Second World War, with rationing ongoing and some Britons still living in slums. Nevertheless, it was a time of rebuilding and rising standards of living, and today we can take much inspiration from the grit of that generation’s positive approach.
To mark the Diamond Jubilee, Times Money looks back 60 years to find out how attitudes to personal finances have changed and what we can learn from savers, borrowers and investors of that time.
How we lived Earnings in 1952 ranged from £300 to £600 a year for a manual worker to £1,200 for a tax inspector and £2,000 for a GP — the latter equivalent to £44,900 today, based on the increase in the retail prices index (RPI), according to Measuringworth.com, but enough to buy a three-bedroom house in the Home Counties, nonetheless. For context, a Hillman Minx saloon cost £701, a ten-day coach tour to the Netherlands £28, lunch at Derry & Toms’ roof garden in Kensington six shillings and a pint of beer nine pence.
Household outgoings were expensive, especially after Rab Butler, the Conservative Chancellor, cut £160 million from food subsidies in his March 1952 Budget, raising the prices of staples including sugar, meat, butter and cheese that were still rationed. Consumer prices had already risen by a steep 12.5 per cent in 1951.
On the day of the Budget, Nella Last, then a 62-year-old Lancashire diarist, wrote: “I felt slight dismay. It’s not just food, it’s coal, soon electricity too, and every tiny item that seems dearer.”
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But she reassured her husband: “We will keep the car. Rising cost of living, petrol, etc, won’t make us pinch. I’ll economise and make do. We have plenty of clothes, bedding, linen, etc, and I’ll manage.” Her determination to keep the car could be a 21st century statement, after successive petrol price increases, but her “make-do” resolution is typical of the wartime and postwar culture of thrift.
This frugal mindset has inspired many young Britons today, who are mending clothes, meal-planning to keep costs down and holidaying in the UK as their grandparents did, but also using new technology, such as money-saving smartphone apps, to advantage.
The carefulness of the 1950s helped to boost savings, with 791,000 savings accounts opened with the Post Office and 382,000 with Trustee Savings Bank in the six months to September 30, 1952. Tax-free National Savings Certificates, which were marketed as helping to restore Britain’s prosperity, were another popular choice, paying interest equivalent to 3 per cent a year over the full ten-year term.
Many people, including Mrs Last, dabbled in the football pools, and Premium Bonds, launched in the 1956 Budget, later caught the public’s imagination by offering secure savings with a shot at a £1,000 prize. Five million bonds were sold on their first day on sale. The standard rate of income tax was nine shillings and sixpence in the pound, equivalent to 47.5 per cent (against today’s basic rate of 20 per cent), funding the nascent welfare state, providing the National Health Service and benefits including family allowances.
Meanwhile, the state pension paid £84 a year for a single person and £140 for a married couple, equivalent to £1,890 and £3,140 today respectively, going by the rise in RPI - well below the current pensions of £5,587 and £8,936. Provision of company pensions was patchy but increasing, and retirement planning proved less of a worry, with older people more able to rely on family support and life expectancies of only 67 and 72 for men and women respectively.
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CASE STUDY: ‘Christmas didn’t exist’
Peter Jones, 85, was in his mid-20s and living in Swansea during the early 1950s. Having served an industrial apprenticeship, he took a job with the National Coal Board, living with an uncle and aunt, before finding better work as a maintenance engineer with the Steel Company of Wales, which provided staff housing. He says:
“I had a modern house, a modern job and the pay was good.”
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However, he says that the hours could be long — for example, he would be expected to work two eight-hour shifts back to back if a colleague was off, and there was “no such thing as Christmas”. Lifestyles were simple, but there was plenty of cheap entertainment for young people, including the cinemas and dance halls, with their Saturday hops.
After his first marriage, he says that he gave most of his weekly pay to his wife for household budgeting. He says: “She didn’t work, but managed our daily spending. That was quite normal then.”
Mr Jones was able to put aside some pay into Post Office savings (at 2.5 per cent interest), and got a mortgage with the Halifax to buy an £1,800 home towards the end of the 1950s — opening his first bank account, with Midland Bank (now HSBC), at the same time.
He says that the costs of buying and renting were comparable at the time and he has never regretted the purchase. “We sold our most recent house three years ago for £270,000 and that came indirectly from that first buy. Some people have rented for 60 years — that is crazy.”
He says that younger generations could learn greater financial discipline from that time. “If you want something, plan and work towards it.”