Liberalism in the British Welfare State

Solveig Lee
9 min readMar 1, 2022


Welfare ideology is complex primarily because of the difficulty of turning ideas into policy. The British welfare state is informed by many actors and shifting party politics, creating a landscape of past and present social policies and ideologies. This paper will argue that the contemporary British welfare state is informed by a collectivist shift in ideology and a push toward liberalism throughout the 20th century. Liberal and social democratic welfare states, and their roots in party ideologies, will be defined. Welfare policies regarding unemployment and employment protection will be analysed in terms of Britain’s shift toward liberal social policy. In contrast, the National Health Services will be outlined as an aspect of social democratic welfare and investigated in the context of Britain’s shift toward liberal welfare politics.

Liberalism, socialism, and conservatism are three pillars from which modern political ideologies are informed. Ideologies are a ‘collection of ideas about the world’ typically connected to ‘political parties, political movements, or state regimes’ (Alcock, et al., 2008, p. 185). Ideologies vary by person, state, and political party, especially when implemented into policy. The basic definitions of these ideologies will help construct an outline of British welfare ideology.

Conservatism favors ‘tradition over change’ and authoritative government with limited welfare, defining ‘family, private property, and the nation’ as pillars of society. Conservatism sees individuals as inherently unequal, rationalizing inequalities and minimal welfare (Lister, 2010, p. 30). This informs key ideals of nationalism and anti-welfare in contemporary politics.

Socialism falls left of center in contrast with conservatism, emphasizing social equality while critiquing capitalism. Socialism argues that markets generate individualism, competition, and inequality. Marxism advocates for more revolutionary worker ownership of the means of production, while social democracy highlights public goods and universalist welfare methods (Alcock, et al., 2008). Social democracy is prevalent in contemporary welfare provision and seen in the 20th century British Labour Party (Lister, 2010).

Finally, classic liberalism views individuals as ‘free, rational and moral beings worthy of equal respect’ (Lister, 2010, p. 31). Liberalism articulates minimal state involvement beyond a basic structuring of society and individual rights. This framework should not provide welfare beyond the ‘basic minimum’; in a successful liberal society, individuals procure effective services through the market (Alcock, et al., 2008, p. 187). Liberal ideals are seen in neo-liberalism but permeate much of contemporary politics.

The welfare state is essentially state responsibility for citizen welfare (Esping-Andersen, 2013). The modern welfare state originates in social needs generated by industrialization and rising political competition to meet the needs of the public (Baldock, et al., 2012). In Britain, welfare is said to originate with the Poor Laws of the late 16thcentury (Harris, 2021). The ‘scale and comprehension’ of welfare varies based on a nation’s history (Baldock, et al., 2012, p. 23). Policy analysts argue that globalization and economic competition inform welfare cuts, popularizing liberal welfare (Baldock, et al., 2012).

The contemporary British welfare state is informed by multiple ideological shifts in welfare policy. The Middle Way, developed after World War II, combined many aspects of classical ideologies. It is often characterized as ‘post-war conservatism’ but is more of a ‘reluctant’ amalgamation of welfare ideologies (Lister, 2010, p. 34). The Middle Way maintains faith in capitalism and the market yet acknowledges the resulting social needs. The post-World War II Beveridge Report informs the Middle Way, arguing for children’s allowances, universal healthcare, and, albeit ‘highly gendered’, employment maintenance (Harris, 2021). The Beveridge Report and the Middle Way combined liberal emphasis on the market, conservative ideals of family, and social democratic understanding of social needs and government welfare.

Following the Middle Way, liberalism began to re-emerge with Margaret Thatcher’s conservative government and theorists like Milton Friedman (Alcock & May, 2014). Known as the New Right or neo-liberalism, it challenged the welfare state and argued that benefits ‘encouraged feckless people to become dependent’ by providing no incentive for economic involvement, and limiting people’s options to ‘meet their needs in a variety of ways’ (Alcock & May, 2014, p. 9). Thatcher argues for market-sourced welfare, saying people should ‘provide for themselves, through market and mutual agencies’ and those ‘temporarily unable to fend for themselves’ should be aided by ‘subtler’ welfare measures (Thatcher, 1996, p. ix). These welfare approaches are rooted in classical liberal values of market, individualism, and minimal welfare. Thatcher’s implementation of this ideology made ‘significant reforms’ throughout the 1980s and 90s, yet the basic tenets of the welfare state ‘remained largely intact’ (Alcock & May, 2014, p. 9). However, Thatcher’s government sowed the seeds for significant shifts toward liberalism.

Thatcherism’s New Right influenced the following New Labour or Third Way ideology under Tony Blair. Blair’s rebranding and separation from Old Labour’s ‘state control, high taxation, and producer’-driven government created a ‘continuation’ of neo-liberalism in ‘social democratic sheep’s clothing’ (Lister, 2010, pp. 46–48). Blair’s rejection of both ‘right-wing pro-market approaches and old left…monopolistic state services’ moved Labour towards the center (Alcock & May, 2014, p. 10). New Labour shared many similarities with the Middle Way and accepts the market as a central force of British society (Lister, 2010). New Labour emphasizes social cohesion and equality of opportunity but is ‘pro-market and ambivalent about the state’, discarding core tenets of social democracy and Old Labour (Lister, 2010, p. 48).

The contemporary British welfare state falls into central, hybrid approach often referred to as ‘liberal collectivism’ (Grimshaw & Rubery, 2012, p. 106). The conservative coalition which followed New Labour resulted in a reassertion of neo-liberalism branded as ‘progressive conservatism’ (Lister, 2010, p. 53). In many ways, the neoliberal coalition is gradually inching British welfare from liberal collectivism to ‘an entirely liberal model’ (Grimshaw & Rubery, 2012, p. 121). The following policy examples will explore this shift toward liberalism.

Throughout the 20th century, the idea of work as the best form of welfare took hold of British politics. New Labour emphasized ‘welfare to work’ with policies targeting unemployed people on Job Seeker’s Allowance (JSA), the policy’s predecessor created under Thatcher which required recipients to prove they were ‘actively looking for work’ (Baldock, et al., 2012, p. 118). New Labour slightly transformed the JSA by offering individualized training and resources, and was arguably less punitive than JSA, yet critics from both sides argued against its cost and compulsive nature (Baldock, et al., 2012). The focus on the market in welfare-to-work schemes is an essentially liberal welfare ideology, and New Labour’s focus on market protections exhibit a continued shift toward liberalism.

New Labour’s employment protection policies were hybrid, supporting both worker rights and a flexible labour market. New Labour implemented and increased minimum wage, decreased the length of employment for a worker to qualify for unfair dismissal, and implemented rights regarding parental leave and part-time work, yet simultaneously dismissed a charter which would have allowed courts to protect employment rights and implemented an opt-out clause for employers regarding maximum working hours. These contrasting series of policies limited the impact of employment protections, leaving the United Kingdom with a tie for the worst employment protection rights at the end of New Labour (Grimshaw & Rubery, 2012).

Despite New Labour’s shortcomings, it maintained both social democratic and liberal aspects of welfare policy. This changes with the conservative coalition, which ‘almost exclusively emphasizes the liberal element’ seeking to cut welfare funding and state responsibility (Grimshaw & Rubery, 2012). The coalition’s current unemployment policy consists primarily of the Work Programme (WP) and Universal Credit. The WP is the largest and most comprehensive UK labor incentive scheme yet. The government hires private companies to provide resources to those in the WP to urge workforce participation, resulting in a degree of liberalist privatization of welfare. Despite its size, ‘the WP payment by results system has not led to substantial improvement’. This is likely due to several reasons, one being the tendency for private companies to pool resources for those already likely to gain employment rather than address a variety of complex circumstances (Wiggan, 2015). Compared to New Labour’s welfare-to-work, the WP consolidates all unemployed into one privatized scheme for a supposedly straightforward labour scheme.

Universal credit also streamlines welfare, replacing ‘six existing means-tested benefits and tax credits with a single benefit’ (Millar & Bennett, 2017, p. 169). It is liberal in that it shrinks the welfare state, working alongside austerity to cut costs. In principle, there is strong support for a simplified benefit system. But in practice, there are many issues. Universal credit is informed by income, assets, and circumstances and requires the recipient to fill out forms and certify their eligibility for each monthly payment. If a recipient fails to do so correctly, they face strict sanctions and potentially lose three years of benefits. In addition, monthly payments vary based household circumstances on one day every month; if a person has just left, was hired that day, or any change occurred, the benefits change accordingly, leading to skewed and unpredictable income for families with tumultuous lives. Universal credit seems ‘designed to suit the people that ministers believe claimants should become’; stable, employed, budgeting (Millar & Bennett, 2017, p. 175). And despite arguing that Universal Credit increases independence, the coalition contradicts this by simultaneously increasing control with stricter sanctions, less flexibility, more conditionality, and pressure to work (Millar & Bennett, 2017).

These coalition policies are a direct result of austerity, sparked by the 2008 recession, which advocates the minimization of government debts by reducing welfare costs. Austerity actively moves Britain to a liberal welfare state, reducing government intervention and increasing market-provided, consumer-driven welfare systems. Additionally, austerity entrenches budget cuts into the welfare state, restricting future efforts to expand welfare and include social democratic policies (Irving, 2021). It effects even the most socialist aspect of British welfare, the National Health Service (NHS).

The NHS has been around since 1948 when it universalized healthcare coverage, nationalized hospitals, and abolished direct payments (Alcock, et al., 2008, p. 243). It is funded by the federal government and national insurance contributions and began as a centralized health system. However, throughout the 20th century private services and insurances developed and Thatcher’s government began a separation of patient and provider responsibilities to individualize healthcare, introducing more liberalism. New Labour increased funding and resources, and while initially against private sector collaboration, changed tact in the 2000 NHS Plan. The Plan further emphasized individualized experience, promoting choice, decentralized hospital leadership, and agreed to use private facilities and resources to treat NHS patients. The controversial plan further pushed liberalism into the NHS with its introduction of consumer choice and market involvement (Alcock, et al., 2008).

The Coalition government followed the path that conservatives and New Labour had carved out for the NHS. It aimed to further marketization and individualization in the partially privatized NHS, combating centralization and top-down bureaucracy which, the coalition argued, diminished healthcare quality. The 2011 Health and Social Care Bill aimed to increase competition: improving healthcare through sub-contracting services to the market sector, localization, and individual choice. These liberal reforms used the market as welfare, diminished the role of central government, and promoting individualism. The reforms aligned with austerity and ‘long-standing Conservative plans to break up the NHS as a single organization’ (Jarman & Greer, 2015, p. 54). The primary reason for these reforms was minimizing government intervention and cutting costs overall, and while the NHS maintains social democratic universal coverage, behind the scenes it is more privatized than ever, pointing to future liberalization of health policy (Jarman & Greer, 2015).

The gradual collectivist combination of ideologies throughout 20th century British politics informs the contemporary welfare state. The coalescence of ideology in the face of globalization and shifting needs has led to a more liberal approach to welfare with social democratic and conservative add-ons. The outline of British political history and then the issues of employment, unemployment, and healthcare within that past explain the implementation of liberal ideology in contemporary British welfare. While the British welfare state maintains aspects of social democracy, liberalism is clearly taking the lead and will continue to influence British social policy.

Works Cited

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Solveig Lee

University of Edinburgh. Sociology and Social Policy. Forum for Global Human Rights Content Writer.