This chapter draws on contemporary political history and social policy to examine how the welfare state has developed in the United Kingdom since 1945. Alterations in the structure of Britain's economy and society after the Second World War have made it harder for the traditional welfare state to respond adequately to a profusion of basic human needs. The rise of new issues and challenges has been notable, including changes in the demographic structure of society combined with the burdens imposed by the growth of a post-industrial economy and the loss of skilled manufacturing employment. The chapter assesses the implications of these structural changes in welfare and social policy among the advanced capitalist countries, focusing principally on the United Kingdom. It then considers the case for an alternative model of ‘relational’ welfare employing new tools and strategies to address changing human needs and hardships.

The starting-point for any historical analysis is inevitably Beveridge's landmark 1942 report, Social Insurance and Allied Services. This statement is widely regarded as the foundation of the modern welfare state in Britain, building on the reforms of the 1906-14 Liberal government. As Beveridge's biographer Jose Harris points out, Beveridge's study was based on existing practice reflecting the development of social policy since Lloyd George, who tentatively introduced a national system of social insurance. Beveridge's report was concerned with how to address material needs by tackling the five manifest evils of want (material poverty), disease (ill health), ignorance (lack of education), squalor (poor housing and environmental conditions) and idleness (long-term unemployment). The social progress that resulted from the implementation of Beveridge's recommendations in post-war Britain was palpable. Material deprivation and extreme poverty in old age markedly declined. There were significant improvements in the physical environment resulting from slum clearance and an expansion of social housing. The reforms had a major influence on other states, including Germany, where Beveridge was engaged to provide advice on schemes of post-war reconstruction (Harris, 1977).

Nonetheless, by the 1960s, dissatisfaction with Beveridge's settlement began to grow (Deacon, 1996). What unified many of the critiques was the apparent failure of the welfare state to address essential human needs. First, relative poverty did not disappear but re-emerged as a new social problem, partly as a consequence of rising inflation that eroded the value of state benefits.