For much of its short but celebrated life, the Welfare State was cherished by Britons. Instant public affection greeted its birth and even as it passed away peacefully yesterday morning, government ministers swore they would do all they could to keep it alive.

The Welfare State’s huge appeal lay in its combination of simplicity and assurance. A safety net to catch those fallen on hard times, come rain or shine, boom or bust, it would be there for all those who had paid in.

Such universality allowed people to project on to it whatever they wished. Welfare State’s father, the Liberal William Beveridge, described his offspring as “an attack on Want”, one of the five evil giants that had to be slain in postwar Britain. But for future Labour prime minister Clement Attlee, “Social security to us can only mean socialism”.

Yet there were critics. Indeed, it is thought that as late as yesterday, an unnamed twentysomething PPE graduate at Policy Exchange was revising a document entitled “What’s Wrong with Welfare?” In the end, however, it was not a rightwing think tank that killed Welfare. The proximate cause of death was a change in child benefit from being available to all to a means-tested entitlement. That marked the end of one of the last remaining universal benefits, in turn causing a fatal injury to Welfare.

It is a testimony to Welfare’s powerful charm that few immediately accepted its passing. Hours after its official death, bloggers continued to talk as if it were still alive, albeit under grave threat from the perfidious Tories.

But analysts later confirmed that the change to child benefit did indeed mark the death of the Welfare State as originally envisaged by Beveridge: a “contributory” system, where those who paid in during their working lives could count on financial help from the government when in need.

It expired peacefully on Monday, 7 January, just weeks after marking its 70th birthday.

The system had suffered many attacks over the years, from politicians talking of a “welfare trap”, government means-testing, and frothy-mouthed journalists reporting isolated cases of benefit fraud.

For many would-be claimants, Welfare had become a ragged system where, however deserving or needy, they weren’t poor enough to qualify for benefits, or the cash involved was too small to bother claiming.

Though David Cameron spoke of a “something for nothing” culture, the opposite was closer to the truth: Welfare had become a “nothing for something” system where taxpayers chipped in but got very little back.

This was very different from the scenes that greeted Welfare’s birth in 1942. Then, the BBC broadcast in 22 different languages the details of Beveridge’s social insurance scheme and the Manchester Guardian repeatedly acclaimed it as a “great plan” and a “big and fine thing”. The public was enthusiastic, buying more than 635,000 copies of what was formally titled the “Report of the Inter-Departmental Committee on Social Insurance and Allied Services”.

Yet the golden period of Welfare really came in the 60s and 70s as, thanks to the work of Barbara Castle, Jeff Rooker, Audrey Wise and others, pensions and allowances were made more generous and tied to typical earnings.

“If you were poor, you were far less behind than at any other time in contemporary British history,” according to Richard Exell, a senior policy officer at the TUC and a campaigner on welfare issues for more than 30 years. “It produced a Britain that was one of the most equal societies in western Europe.”

Just before Margaret Thatcher came to power, a single person out of work would get unemployment benefit worth almost 21% of average earnings; last year, jobseeker’s allowance was nearly half that, amounting to just over 11%.

Welfare’s big decline came in the 1980s, as the Conservatives moved more benefits from available to all to on offer only to the poor. This was justified as making public spending more efficient.

But, according to a famous and much quoted study by Walter Korpi and Joakim Palme, such means-testing is far less effective and more expensive than universal benefits. In a study of 18 rich countries, the academics found that targetting benefits at the poorest usually generated resentment among those just above – and led to smaller entitlements.

This “paradox of redistribution” was certainly observable in Britain, where Welfare retained its status as one of the 20th century’s most exalted creations, even while those claiming benefits were treated with ever greater contempt.

“If you look at unemployment and sickness benefit as a proportion of average earnings, then Britain has one of the meanest welfare systems in Europe,” says Palme. “Worse than Greece, Bulgaria or Romania.”

Some of that same meanness can be seen in the way Welfare was discussed as it moved into its sixth and seventh decades. It was no longer about social security but benefits. Those who received them were no longer unfortunate but “slackers“, as Iain Duncan Smith referred to them. A recent study by Declan Gaffney, Ben Baumberg and Kate Bell of 6,600 national newspaper articles on Welfare published between 1995 and 2011 found 29% referred to benefit fraud. The government’s own estimate of fraud is that it is less than 1% across all benefit cases.

The death of Welfare does not mean an end to all benefit spending. Instead, it is outlived by its predecessor, Poor Relief, in which only the very poorest will receive government cash. Analysts are unsure about the repercussions.

“I’m not aware of any country that’s ever had a combination of Victorian-style poor laws and parliamentary democracy,” says Gaffney.

Instead of a book of condolences, there will be a special edition of the Guardian’s letters page. In separate tributes, BBC4 will air some respectful but little-watched documentaries; there will also be a truly unbearable edition of The Moral Maze.

Margaret Thatcher and her chancellor Sir Geoffrey Howe were behind a politically toxic plan in 1982 to dismantle the welfare state, newly released Downing Street documents show. She later attempted to distance herself from the plans after what was described as a “riot” in her cabinet.

The proposals considered by her cabinet included compulsory charges for schooling and a massive scaling back of other public services. “This would of course mean the end of the National Health Service,” declared a confidential cabinet memorandum by the Central Policy Review Staff in September 1982, released by the National Archives on Friday under the 30-year rule.

Nigel Lawson, then the energy secretary, said the report by the official thinktank on long-term public spending options caused “the nearest thing to a cabinet riot in the history of the Thatcher administration”.

In her memoirs, Thatcher said: “I was horrified when I saw this paper. I pointed out that it would almost certainly be leaked and give a totally false impression … It was all a total nonsense,” claiming the proposals were never seriously considered by her or her ministers.

But the 1982 cabinet papers show the politically explosive paper was discussed at a special half-day extended cabinet discussion on 9 September that year. They show that Thatcher and Howe had been encouraging the CPRS thinktank to come up with such long-term radical options since February that year and that Howe continued to defend them even after the cabinet “riot” described by Lawson.

As part of that revolt a watered-down version of the CPRS paper was leaked to the press, provoking Labour accusations that Thatcher had a secret agenda to dismantle the postwar welfare state – a charge that continues to echo down the years.

Thatcher responded by famously promising in her 1982 Conservative party conference speech in Brighton that the NHS was “safe with us” – a claim that every Conservative leader since has felt compelled to repeat.

But the papers show the revised version of the CPRS paper that was leaked was mild in comparison with the original set of proposals – and that Thatcher’s horror had more to do with the prospect of a leak than with the nature of its contents.

The leaked version proposed introducing education vouchers, ending the state funding of higher education, freezing welfare benefits and an insurance-based health service.

But as John Sparrow, the merchant banker Thatcher had appointed to head the CPRS, complained to her when she demanded a more circumspect version, the revised paper “loses a large part of its punch”.

The original version went a lot further, including compulsory charges for schooling alongside a “drastic reduction in resources going to the public sector”, full-cost university tuition fees and breaking the link that then existed between welfare benefits and prices.

But the earlier version’s most controversial privatisation proposal concerned the health service: “It is therefore worth considering aiming over a period to end the state provision of healthcare for the bulk of the population, so that medical facilities would be privately owned and run, and those seeking healthcare would be required to pay for it.

“Those who could not afford to pay would then have their charges met by the state, via some form of rebating or reimbursement.”

The only exceptions might be the long-term institutional care of the “mentally handicapped, elderly” who “clearly could not afford to pay”.

One of those who worked on the CPRS paper was David Cameron’s current advisor on crime and policing, Lord Wasserman. The cabinet papers show Gordon Wasserman, who was on the thinktank’s staff from 1981-83, proposed cutting 25% of state school teachers in a background paper for the education section.

The cabinet papers show that far from being some kind of surprise freelance operation, the CPRS report was encouraged and commissioned by Thatcher and Howe. As early as February, Howe was pressing for a wide-ranging discussion on the future size and shape of the public sector. On 28 July, the Downing Street papers show that he told Thatcher: “We should not be inhibited at this stage by such considerations as … the alleged impossibility of change. A discussion of this kind would pave the way for some major strategic decisions affecting our programmes as a government for the next parliament.”

Howe proposed a Treasury paper also be discussed at the special cabinet meeting on 9 September: “The PM agrees too that it would be useful if there were a CPRS paper pointing up some of the longer-term options open to us.” Thatcher said they should be “vigorously explored”.

On the eve of the meeting, the cabinet secretary, Sir Robert Armstrong, told Thatcher that Howe had suggested “and you agreed” that the CPRS should be asked to prepare a paper outlining possible ways of making significant changes to the scale and pattern of public expenditure.

Armstrong said the value of the meeting lay in the chance for the cabinet to “lift its eyes from current preoccupations and to focus on what they like the shape of things in this country to be at the end of the decade.

“At the extreme end, some may argue that any of the radical proposals discussed by the CPRS would be even more unacceptable than the prospect of unchanged policies. But the meeting will have failed in its purpose if ministers are not willing at least to contemplate the possibility of radical action,” said Armstrong, who went on to recommend that all options should be remitted for further study.

Jobseekers in England, Scotland and Wales will have to use a new government website that can automatically tell jobcentres about their applications – or risk losing their benefit payments.

The Welfare Secretary Iain Duncan Smith told political correspondent Ross Hawkins on Radio 4’s The World at One programme, that the new site can automatically send people vacancies – and demand explanations from them if they do not apply.

Iain Duncan Smith explained that if a job adviser thinks the reasons that you have given for not applying for a job are “specious” then “he may call you in and say I really think that you ought to be applying for these jobs.”

When asked about issuing electronic cards that would restrict claimants in spending their benefits payments, he said that “giving people cash sometimes can actually lead to further problems”.

He stressed that the scheme would only affect specific claimants.