When Britain demanded fair shares for all

Rethinking the welfare state part 2; It is 50 years since the Attlee government took office - the government that gave us a welfare state. Nicholas Timmins looks at how the national mood created this 'New Jerusalem', and explains why things are different today

Fifty years ago today, the Labour government of Clement Attlee took office with a landslide majority of 146 - the biggest ever post-war victory. As its MPs assembled in the Commons chamber, the triumphant Labour ranks horrified the Tory remnants by singing the Red Flag.

It was the start of the roller-coaster ride to reconstructing Britain after the Second World War - a six year period that saw the beginnings of the end of Empire, the first humiliating post-war devaluation, the construction of a British atom bomb, the nationalisation of railways, coal, the Bank of England and much else, the development of jet engines, and the start of both the Korean war and the Cold War.

But the lasting memorial of the 1945-51 Labour government is the founding of the modern welfare state.

Its roots stretch far back. But its immediate stimulus had been the Beveridge report of 1942 with its clarion calls for full employment, a national health service, family allowances and what Churchill was to dub "cradle to grave" social security.

Launched days after the first glimmer of hope in the war - Montgomery's desert victory at El Alamein - it rode the crest of that wave, as huge queues formed to buy the report on the night before publication. It sold an unbelievable 600,000 copies, a record not beaten for a government document until the Profumo report of the Sixties.

Beveridge's marvellously Bunyanesque language, demanding a war on the "five giant evils" of Want, Disease, Ignorance, Squalor and Idleness, encapsulated perfectly the sense of "Never Again" that the war had engendered. Rationing ("fair shares for all" was a Board of Trade, not a Labour Party, slogan), massive population movements, the bombing and the deaths, which affected all classes, produced - despite looting, black market fiddling and a record rise in the prison population - a sense of shared sacrifice. Never again should Britain go back to the mass unemployment, the uneven, discriminatory health care, and the hated household means-test of the Thirties.

Labour had something to build on. Full employment already existed. It had done so since early in the war as men were moved into the armed forces and women into the factories. Keynesian economics were coming into play and the wartime coalition had already committed itself to maintaining "a high and stable" level of employment.

Housing was quite another matter. The situation was dire. Britain emerged from the war with 200,000 houses destroyed, and more than twice that number uninhabitable or in need of serious repair. Something like a quarter of the stock had been damaged in the war. There was a massive shortage of both materials and manpower. "Where are all the people I need for my programme?" Aneurin Bevan, the minister responsible for housing, once demanded in Cabinet. "Looking for houses, Nye," was Attlee's dry reply.

Pre-fabs were already being built. But the housing programme was painfully slow to get going. The situation briefly looked threatening as mass meetings in Leicester Square demanded houses and people occupied empty homes and offices. When squatters then took over abandoned army camps, the Government suddenly realised it should have thought of the idea itself. For a time 46,000 people lived in them.

Bevan used council housing as his main tool, although controls on building for sale were gradually eased. He insisted on big, well-built homes - an attitude that led Hugh Dalton, the Labour Chancellor, to dub him "a tremendous Tory".

He came repeatedly under attack for building too few homes. But he equally repeatedly insisted that he would not build slums. "We shall be judged for a year or two by the number of houses we build; we shall be judged in 10 years' time by the type of houses we build," he declared.

Housing is generally judged the Labour government's welfare state failure. Too few homes helped them lose the 1951 election as the Tories pledged to build 300,000 a year (they did, but they built smaller and launched high-rises). But if Bevan was wrong for his party, he was right for his country. His big well-built houses proved among the most popular when Margaret Thatcher introduced the right-to-buy 30 years later.

Bevan's lasting memorial, however, is the NHS, the jewel in the crown of the welfare state and its one almost unqualified success. The coalition had already agreed there should be such a service and wartime had already provided an NHS of sorts.

But in three ways Bevan's contribution was decisive. He nationalised the hospitals, bringing order to chaos. He "stuffed the consultants' mouths with gold", getting them into the NHS by allowing them to do private practice within its ambit, together with the merit awards which only yesterday were being revised. And he faced down the GPs who long threatened not to join, believing they would become civil servants at the beck and call of a Welsh "medical Fuhrer".

Social security was the work of Jim Griffiths, a Welshman like Bevan, who had seen the Beveridge report as "manna from heaven". The wartime coalition had already legislated for family allowances - the precursor of child benefit - and Griffiths found draft Bills to implement the core of the Beveridge report awaiting him.

But key decisions were made which were to undermine Beveridge's monumental, if flawed, design. These included paying pensions in full from the start. Beveridge had said they should be phased in over 20 years, warning that "it is dangerous to be in any way lavish to old age." The result was a financial crisis in the national insurance fund in the Fifties.

In addition, the insurance benefits were pitched too low so that from the start the means-tested top-ups, which Beveridge hoped would wither away, were still needed for many. Whether higher benefits could have been afforded is a moot question. But their low level meant that means-testing remained a permanent part of the system and became a central one when full employment collapsed amid the oil shocks and monetarist economics of the Seventies - changes which coincided with remorseless social trends like the rise in one parent families.

With this, a system designed for a world of nuclear families and male breadwinners, underpinned by full employment, cracked. Social security has, nonetheless, been responsible for largely keeping the peace through the economic traumas of the Eighties and Nineties.

If Beveridge, soon to be a Liberal MP, designed social security, and the Labour Bevan was the architect of the NHS, it was the Conservative Rab Butler who had legislated in 1944 for free secondary education for all and the raising of the school-leaving age to 15.

Labour's task was to implement that Act whose main effect, Butler had declared, would be "as much social as educational ... welding us all into one nation". There was a desperate battle to find both enough teachers and buildings. Factories and housing took priority over hospitals and schools whose classrooms were stuffed to bursting point.

But education was in many ways the least controversial part of the welfare state during the late Forties. The explosion over selection and the way children were divided at 11 into "gold, silver and iron", depending on whether they went to grammar, technical or secondary modern schools, was yet to come - as were the battles over comprehensives, teaching methods and finally the curriculum.

By 1951, Attlee could declare himself proud of his "New Jerusalem". It had undeniably provided new opportunities for a then much more clearly defined working class, allowing their children, for example, to take up the grammar school places their brains won for them.

But it had also pulled the middle classes firmly into the welfare state's embrace. They paid higher taxes, but what at times in the Thirties had proved frightening burdens had been lifted. They no longer had to pay school fees, their GP and hospital care became free and they gained maternity benefits, a state pension, family allowances and a death grant.

With everyone from the barrow boy to the field marshal covered, a huge middle-class stake in welfare had been created which has yet to be eroded in education and health - although less so in social security, where the middle-class stake was never as large.

The Conservatives, who had laid many of the plans without ever having Labour's conviction about the project, found themselves forced to adjust to a new order. A loose, though at times tempestuous, consensus came into being around the welfare state for the next 30 years. Not until the arrival of Margaret Thatcher was a serious attempt made to break it.

The national mood that made it possible is hard to recall now. Perhaps it is best summed up by a Chancellor - normally the Gradgrind of any Cabinet. As Hugh Dalton handed over the Treasury cash for family allowances, he did so, he said: "With a song in my heart." It is hard to imagine Michael Portillo, as Chief Secretary, saying that.

Nicholas Timmins's book 'The Five Giants: A Biography of the Welfare State' is published by Harper Collins today.