The role of the welfare state were successful in reducing poverty through tackling problems that existed before the 1940s. However, part of the answer to the question depends on the definition of poverty. It could be said that the welfare state has reduced absolute poverty but not relative poverty. According to the social democratic perspective, the welfare state has significantly reduced poverty.
The welfare state was created in the 1940s with the aim of eliminating the 5 giant evils affecting the UK according to a beveridge report. From this, the welfare state tackled problems such as providing a national insurance system (want), introduced the 1944 education act (ignorance), council housings (squalor), full employment (idleness) and the NHS (disease). However, Giddens would argue that the this approach has failed to respond to changes which occurred since the 1980s. According to the New Right perspective, the welfare state has actually exacerbated poverty both directly and indirectly. The welfare state directly causes poverty as Murray points out that the generosity of the welfare state creates a dependency culture and a work shy underclass who are prepared just to live off benefits without ever working thus the welfare state undermines personal responsibility and self help. Also, the welfare state indirectly causes poverty. This is because the high amount of tax, which funds the welfare state, hinders entrepreneurs to create new jobs. However, the New Right view has been highly criticised because the welfare state and the minimum wage help to protect workers from employers exploiting them. Without the welfare state, there would be a large gap between the rich and poor.
The third way approach takes the middle ground between social democratic and New Right views of the welfare state, and argues that the welfare state needs to offer a "hand up, not a hand out". This was dealt with by the New Labour which introduced the minimum wage and tax credits to overcome the poverty trap by making work pay more than could be obtained in 2