In Britain's first major state effort to protect against poverty in old age, the country's Liberal government in 1908 created a means-tested, tax-financed pension scheme that began paying pensions at age 70. Initially popular among beneficiaries, the scheme was soon strained politically by rapidly rising prices during World War I and mounting criticism of the inequities and indignities of the means test. The old-age pensioners' lobby became increasingly militant in its demands for more generous state benefits on a universal basis. Meanwhile, as trade unions gathered organizational strength and the right to vote was extended to the nonpropertied, the parliamentary Labour Party tremendously improved its electoral position. Though the government increased pension levels during and after the war as partial compensation for inflation, electoral and social pressures for more generous and widely available pensions grew. Postwar governments of all partisan stripes contemplated either supplementing or replacing the 1908 system. While organized labor and most of the Labour Party called for universal tax-financed pensions, the Conservative Party began in the early 1920s to investigate the possibility of a contributory pension scheme, free of a means test.

In the midst of these preparations came the watershed election of 1924. The vote that year marked the end of the Liberal Party as a serious contender for government office. With 48.3 percent of the vote in a three-way contest in a first-past-the-post electoral system, the Conservatives won 419 parliamentary seats to Labour's 151 and the Liberals' 40 – the largest Tory majority since 1832.