Unit 3: Post War Economic Consensus - Episode 1/6

The first episode of six on why UK Economic Policy has changed since 1945.

Click here to access part one (10 Minutes long)

Points to note

The major features of domestic politics included:

1. Governments accepted a commitment to maintain full employment by Keynesian techniques of economic management. Ministers would use their levers, such as cutting taxes and boosting state spending, to increase the level of economic activity.

2. Acceptance and some encouragement of the role of the trade unions. In contrast to the pre-war years, governments recognised and consulted them regularly on workplace relations and economic policy. The unions’ access to government was increased partly by full employment and partly by governments turning, post-1961, to income policies as a way of curbing inflation.

3. The mixed economy, with a large role for state ownership of the utilities (such as gas, electricity, coal, rail, etc) and intervention and planning in the economy.

4. The welfare state. The object of the national insurance system and the National Health Service was to provide an adequate income and free health when a family’s income was hit by, for example, sickness, old age, unemployment or death of the main breadwinner. The services were provided out of general taxation, or insurance, and represented social citizenship.

5. There was a belief that government could play a positive role in promoting greater equality through social engineering, for example, by progressive taxation, redistributive welfare spending, comprehensive schooling and regional policies.

Abroad, the parties agreed on: the transition of the empire to the British Commonwealth, an association of independent states; British membership of the North Atlantic Treaty Organisation (Nato); nuclear weapons, (regarded as a mark of being a major power); and, on balance, that Britain should join the European Community.

These policies were pursued by both Labour and Conservative governments, the latter because they thought it was necessary to gain working class support to win general elections and gain the consent of the major interest groups.


Consensus is not an ideal term because it may be read as suggesting that there were no differences between the parties. In fact, the above ideas and policies were often challenged by the left of the Labour party and by the free market or right wing of the Conservatives. But much of the political elite – the media, civil service and the leaderships of the parties, particularly when they were in government - shared many of these ideas.