Directly after the Second World War, Britain began to build a system of welfare for its citizens, much of which is still in place today. When the Labour Party was elected to government in 1945, it was concerned with the well-being of the soldiers returning from the war, wanting to provide them and their families with a good standard of living. The person given the task of introducing these changes was lawyer and economist William Beveridge. He produced a report which recommended that the government concentrate on resolving what he called the five 'Giant Evils': Want, Disease, Ignorance, Squalor and Idleness.

The centrepiece of his programme was a system of compulsory national insurance. It was to be paid by every working person, whether rich or poor, so that funds would always be available for the sick or unemployed, including pensions for retired people. It was an ambitious scheme which was to provide care for everyone from 'the cradle to the grave'. The government followed his suggestions, building a strong economy which would enable the returning troops to begin peacetime work—an essential condition for a system being built on contributions from workers' salaries. Beveridge also prioritized the provision of universal education as part of his vision, and he recommended that British citizens were provided with marriage, maternity, training and death grants. To fund all of these changes, the government also updated the taxation system so that the higher an individual's income, the more tax he or she paid.