Today's labour market is very different to the one in which the Beveridge Report was conceived. Commissioned in 1941 at the height of the Second World War, it was written as part of the efforts of the wartime government to “plan the peace” but drew on prewar experiences. Almost the entirety of the 1920s and 1930s had seen very high rates of unemployment in the UK. The years after the First World War saw a prolonged slump that was exacerbated by the fallout from the Wall Street Crash of 1929.

As shown in Figure 1.1, it was only at the very end of the 1930s, shortly before the onset of the Second World War, that unemployment had returned to more typical levels. Beveridge addressed, therefore, what the government should do to support those looking for work – to avoid “Want” – and what the government could do to help people back into work – to avoid “Idleness”.

These questions are still part of our policy conversation today, but perhaps with insufficient recognition of how the UK labour market has changed over the past few decades. Contrary to the comments of Iain Duncan Smith that opened this chapter, the UK is not facing a situation in which “idleness is institutionalized”. In fact, we have the highest employment rates ever seen and the key issue facing the UK is that too many people are trapped in low-paid insecure work.

It is important, therefore, to start with a clear idea of what has actually happened in the UK labour market over the past few decades and how much has changed since Beveridge's time.

First and foremost, recent years have seen historically high levels of employment. Figure 1.2 shows that, before the pandemic, January 2020 saw the highest proportion of people in work ever recorded. Even in the depths of the Covid-19 recession, the employment rate was higher than ever seen before 2016.