The Creation of Britain’s Welfare State

Welfare State Arrives
6th August 1946: A mother and her family drawing her family allowance at Vicarage Lane Post Office, Stratford, East London, on the first day the allowance was paid.

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Before World War 2, Britain's welfare — such as payments to support the sick — was overwhelmingly provided by private, volunteer institutions. But a change in outlook during the war allowed Britain to construct a 'Welfare State' after the war: a country where the government provided a comprehensive welfare system to support everyone in their time of need. It remains largely in place today.

Welfare Before the Twentieth Century

In the twentieth century, Britain put into effect the modern Welfare State. However, the history of social welfare in Britain did not begin in this era, as people had spent centuries reforming how to deal with the sick, the poor, the unemployed and other people struggling with poverty. Churches and parishes had emerged from the medieval period with the leading role in caring for the disadvantaged, and Elizabethan poor laws clarified and reinforced the role of the parish.

As the industrial revolution transformed Britain — as populations grew, gathered in expanding urban areas, and took up new jobs in ever increasing numbers — so the system to support people also evolved, sometimes with government laws once again clarifying efforts, setting contribution levels and providing care, but frequently thanks to charities and independently run bodies. Despite reformers trying to explain the reality of the situation, easy and mistaken judgments of the disadvantaged continued to be widespread, with poverty often being attributed to idleness or poor behavior rather than socio-economic factors, and there was no over-riding belief that the state should run its own system of universal welfare. People who wanted to help, or needed help, thus had to turn to the volunteer sector.

These created a vast voluntary network, with mutual societies and friendly societies providing insurance and support. This has been called a 'mixed welfare economy', as it was a mixture of state and private initiatives. Some parts of this system included the workhouses, places where people would find work and shelter, but at a level so basic they would be 'encouraged' to seek outside work to better themselves. On the other end of the modern compassion scale, you had bodies set up by professions such as miners, into which they paid insurance and which protected them from accident or illness.

20th Century Welfare Before Beveridge

The origins of the modern Welfare State in Britain are often dated to 1906, when Herbert Asquith and the Liberal party gained a landslide victory and entered government. They would go on to introduce welfare reforms, but they did not campaign on a platform of doing so; in fact, they avoided the issue. But soon their politicians were making changes to Britain because there was pressure building to act. Britain was a rich, world leading nation, but if you looked you could easily find people who were not just poor, but actually living below the poverty line. The pressure to act and unify Britain into one mass of secure people and counter the feared division of Britain into two opposed halves (some people felt this had already happened), was summed up by Will Crooks, a Labour MP who said in 1908 "Here in a country rich beyond description there are people poor beyond description."

The early twentieth century reforms included a means-tested pension, non-contributory, pension for people over seventy (the Old Age Pensions Act), as well as the National Insurance Act of 1911 which provided health insurance. Under this system, the friendly societies and other bodies continued to run the healthcare institutions, but the government organized the payments in and out. Insurance was the key idea behind this, as there was reluctance among the Liberals over raising income taxes to pay for the system. (It's worth noting that German Chancellor Bismarck took a similar insurance over direct tax route in Germany.) The Liberals faced opposition, but Lloyd George managed to persuade the nation.

Other reforms followed in the inter-war period, such as the Widows, Orphans, and Old Age Contributory Pensions Act of 1925. But these were making changes to the old system, tacking on new parts, and as unemployment and then depression strained the welfare apparatus, people began to look for other, far larger scale, measures, which would ditch the idea of the deserving and undeserving poor completely.

The Beveridge Report

In 1941, with World War 2 raging and no victory in sight, Churchill still felt able to order a commission to investigate how to rebuild the nation after the war. This included a committee which would span multiple government departments and would investigate the nation's welfare systems and recommend improvements. Economist, Liberal politician and employment expert William Beveridge was made the chairman of this commission. Beveridge was an ambitious man, and he came back on December 1st, 1942 with The Beveridge Report (or 'Social Insurance and Allied Services' as it was officially known). His involvement had been so great his fellows had decided to sign it with just his signature. In terms of Britain's social fabric, this is arguably the most important document of the twentieth century.

Published just after the first major Allied victories, and tapping into this hope, Beveridge made a raft of recommendations for transforming British society and ending 'want'. He wanted 'cradle to the grave' security (while he did not invent this term, it was perfect), and although the ideas were rarely new, more a synthesis, they were published and accepted so widely by an interested British public as to make them an intrinsic part of what the British were fighting for: win the war, reform the nation. Beveridge's Welfare State was the first officially proposed, fully integrated system of welfare (although the name was by then a decade old).

This reform was to be targeted. Beveridge identified five "giants on the road to reconstruction" that would have to be beaten: poverty, disease, ignorance, squalor, and idleness. He argued these could be solved with a state-run insurance system, and in contrast to the schemes of previous centuries, a minimum level of life would be established that was not extreme or punishing the sick for not being able to work. The solution was a welfare state with social security, a national health service, free education for all children, council-built and run housing, and full employment.

The key idea was that everyone who worked would pay a sum to the government for as long as they worked, and in return would have access to government aid for the unemployed, ill, retired or widowed, and extra payments to aid those pushed to the limit by children. The use of universal insurance removed the means test from the welfare system, a disliked — some may prefer hated — pre-war way of determining who should receive relief. In fact, Beveridge didn't expect government expenditure to rise, because of the insurance payments coming in, and he expected people to still save money and do the best for themselves, very much in the thinking of the British liberal tradition. The individual remained, but the State provided the returns on your insurance. Beveridge envisaged this in a capitalist system: this was not communism.

The Modern Welfare State

In the dying days of World War 2, Britain voted for a new government, and the campaigning of the Labour government brought them into power (Beveridge wasn't elected.) All the main parties were in favor of the reforms, as Labour had campaigned for them and promoted them as a just reward for the war effort, they commenced, and a series of acts and laws were passed. These included the National Insurance Act in 1945, creating compulsory contributions from employees and relief for unemployment, death, sickness, and retirement; the Family Allowances Act providing payments for large families; the Industrial Injuries Act of 1946 providing a boost for people harmed at work; Aneurin Bevan's 1948 National Health Act, which created a universal, free for all social healthcare system; the 1948 National Assistance Act to help all in need. The 1944 Education act covered the teaching of children, more acts provided Council Housing, and reconstruction began to eat into unemployment. The vast network of volunteer welfare services merged into the new government system.

As the acts of 1948 are seen as key, this year is often called the start of Britain's modern Welfare State.


The Welfare State was not forced; in fact, it was widely welcomed by a nation which had largely demanded it after the war. Once the Welfare State was created it continued to evolve over time, partly due to the changing economic circumstances in Britain, but partly due to the political ideology of the parties which moved in and out of power. The general consensus of the forties, fifties, and sixties began to change in the late seventies, when Margaret Thatcher and the Conservatives began a series of reforms regarding the size of the government. They wanted fewer taxes, less spending, and so a change in welfare, but equally were faced with a welfare system that was starting to become unsustainable and top heavy. There were thus cuts and changes and private initiatives began to grow in importance, starting a debate over the role of the state in welfare which continued through to the election of the Tories under David Cameron in 2010, when a 'Big Society' with a return to a mixed welfare economy was touted.