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1 February 2023

The Welfare State and Inequality: were the UK reforms of the 1940s a success?

The period immediately after World War II is widely seen as the beginning of the ‘golden age’ of the welfare state in western Europe (Wincott, 2013), not least in the UK where the Beveridge Report of 1942 is seen as a landmark. At the time, the results of the reforms of the 1940s were hailed as a great triumph, with the Manchester Guardian proclaiming ‘the ending of poverty’ and The Times celebrating ‘the virtual abolition of the sheerest want’. From its inception in 1948, the National Health Service was enormously popular and often perceived as synonymous with the welfare state (Lowe, 1993). This euphoria was, however, short-lived. By the 1960s, poverty had been re-discovered (Abel-Smith and Townsend, 1965) and by the 1970s serious concern was being expressed about continuing disparities across social classes in health outcomes (Department of Health and Social Security, 1980).

Of course, the 1940s is better seen as the completion of the welfare state rather than its beginning, which dates back at least to the introduction of state old-age pensions and national insurance under the 1906–11 Liberal Government (Thane, 1982). The inter-war period saw a considerable expansion of government social welfare spending, from 4.7% of GDP in 1913 to 10.5% of GDP in 1937 (Middleton, 1996). From 1922 to 1938, an average of 22.1% of the population received a benefit payment at some point during the year (Boyer, 2018). By the late 1930s, ‘absolute poverty’ among working households in urban areas of the UK had virtually disappeared in the context of growth in wages and reductions in fertility since the start of the century (Gazeley and Newell, 2012). Nevertheless, resort to relief under the Poor Law was still very considerable and there were serious shortcomings in the provision of health services (Harris, 2004).

The years around the end of World War II certainly did see major reforms to the welfare state in the ‘Beveridge era’. These include the National Assistance Act (of 1946), the National Insurance Act (of 1948), the Education Act (of 1944) and the National Health Service (of 1948). The implication was a large increase in government social expenditure and in taxation compared with pre-war days. The objective, according to Beveridge, was freedom from want, disease and ignorance. Even though the immediate objective was not to achieve specific decreases in the inequality of income, health and educational opportunity, clearly it was expected that these inequalities would be significantly reduced.

This commentary describes the reforms, sets out what is known about changes in inequality between the pre- and post-war periods and the impact of the reforms, and then seeks to evaluate the design of the Beveridge Report and the consequences of its less than full implementation. As is well known, it failed to meet expectations that it would abolish ‘poverty’ and in this commentary I seek to explain why this was the case and why the extent of redistribution and reduction in inequality after World War II was ultimately quite modest.

Cite this as:

Crafts, N. (2023), ‘The welfare state and inequality: were the UK reforms of the 1940s a success?’, IFS Deaton Review of Inequalities,