When Britain emerged victorious from the Second World War, the Labour Party under Clement Attlee came to power and created a comprehensive welfare state, with the establishment of the National Health Service giving free healthcare to all British citizens, and other reforms to benefits. The Bank of England, railways, heavy industry, and coal mining were all nationalised. The most controversial issue was nationalisation of steel, which was profitable unlike the others. Economic recovery was slow, housing was in short supply, bread was rationed along with many necessities in short supply. It was an "age of austerity". American loans and Marshall Plan grants kept the economy afloat. India, Pakistan, Burma and Ceylon gained independence. Britain was a strong anti-Soviet factor in the Cold War and helped found NATO in 1949. Many historians describe this era as the "post-war consensus" emphasising how both the Labour and Conservative parties until the 1970s tolerated or encouraged nationalisation, strong trade unions, heavy regulation, high taxes, and a generous welfare state.
The Labour Party introduced charges for NHS dental services and glasses in 1951. The Conservatives returned to power in 1951, accepting most of Labour's post-war reforms, but introduced prescription charges to the NHS in 1952 and denationalised steel in 1953. They presided over 13 years of economic recovery and stability. However the Suez Crisis of 1956 demonstrated Britain was no longer a superpower. Ghana, Malaya, Nigeria and Kenya were granted independence during this period. Labour returned to power under Harold Wilson in 1964 and oversaw a series of social reforms including the partial decriminalisation of homosexuality and abortion, the relaxing of divorce laws and the end of capital punishment. Edward Heath returned the Conservatives to power from 1970 to 1974, and oversaw the decimalisation of British currency, the accession of Britain to the European Economic Community, and the height of the Troubles in Northern Ireland. In the wake of the 1973 oil crisis and a miner's strike, Heath introduced the three-day working week to conserve power.
Labour made a return to power in 1974 but a series of strikes carried out by trade unions over the winter of 1978/79 (known as the Winter of Discontent) paralysed the country and as Labour lost its majority in parliament. The general election in 1979 took Conservative Margaret Thatcher to power effectively ending the post war state interventionist consensus of prior decades despite initial intense Labour opposition.
Labour Government, 1945–1951
Following the Second World War, the landslide 1945 election returned the Labour Party to power and Clement Attlee became Prime Minister of the United Kingdom. The party quickly nationalised critical sectors of the economy, especially declining industries. The Bank of England was nationalised along with railways (see Transport Act 1947), coal mining, public utilities and heavy industry. The most controversial case was the takeover of the highly profitable iron and steel industry, which was opposed and finally reversed by the Conservatives.
Welfare state
A comprehensive welfare state was created with the National Insurance Act 1946, in which people in work paid a flat rate of National Insurance. In return, they (and the wives of male contributors) were eligible for flat-rate pensions, sickness benefit, unemployment benefit, and funeral benefit. Various other pieces of legislation provided for child benefit and support for people with no other source of income.
In the estimation of historians, and later politicians of the major parties, the most successful and permanent program was the creation of a National Health Service which started operations in 1947. It entitled all citizens to healthcare, which, funded by taxation, was free at the point of delivery. The opposition from physicians was bought off by allowing them to keep lucrative private practices on the side. All hospitals were nationalised and brought into the system. John Carrier and Ian Kendall find that the mission for Minister of Health Aneurin Bevan was resolving "The potential conflict between the aim of providing a universalist, comprehensive health service of a good standard and that of containing health costs to a reasonable level, and how to finance the system in such a way that certainty and sufficiency of funds could be guaranteed." Michael Foot adds that Bevan had to persuade "the most conservative and respected profession in the country to accept and operate the Labour government's most intrinsically socialist proposition." In the end historians give Bevan the major credit for the success.