Following an overwhelming victory in the general election of 1906, the Liberal Party with the support of the newly founded Labour Party passed legislation that paved the way for the construction of the welfare state in the middle of the century. The legislation laid the groundwork for health and unemployment insurance, old age pensions, and minimum wage standards. When the House of Lords attempted to block the initial reforms, the Commons passed the Parliament Act of 1911, curbing the upper chamber's powers. Liberalism according to George Dangerfield in The Strange Death of Liberal England meant tolerance and progressivism. Its death was “strange” because, of the three outbreaks of illiberalism in the prewar era – that of the suffragists, the striking unionists, and the Ulster Unionists – only the last was not progressive or radical. Thus the prewar years can be described as the beginning of what Ralph Dahrendorf calls the “social democratic century” in Britain, one which he argues does not end until the 1970s and 1980s.

Social democracy, according to Dahrendorf, emphasizes benevolent democracy guided by collective obligations; a market-oriented economy that nevertheless is planned and managed by the state; liberal conditions counterbalanced by social and economic entitlements (rather than merely voting rights) for all. In 1942 Sir William Beveridge's Social Insurance and Allied Services (The Beveridge Report) provided a blueprint for welfare in England, and became a bestseller.