A decade ago, Britain was firmly in the liberal camp of welfare states, favouring individualism and markets with limited social protection. It is this model that the French people have railed against in their rejection of the European Constitution, seeing it as a threat to their hard-won social rights.

Their concerns are understandable. In these “liberal” welfare states, social security payments are focused on those most in need and aimed at preventing abject poverty rather than providing a decent standard of living. Lightly regulated labour markets create a large low-wage service sector. This enables them to have high employment, low taxation and balanced budgets, but at the price of high levels of poverty and inequality.

Britain retains many liberal features. Its product and service markets are open and competitive, and its labour market is lightly regulated. But in the past eight years, the British model has evolved, retaining the best features of the liberal framework while adopting new social elements. It now looks less like an Anglo-Saxon model than an Anglo-social one, striving to marry the economic dynamism of US-style capitalism with the equity and social protection of Scandinavian countries.

Some policy shifts stand out. Perhaps the most vital has been a focus on active labour market policies, with work seen as the best way out of poverty. Tax credits have helped to “make work pay” and new job search or learning activity conditions have been linked to social security payments.

A second has been to re-regulate some aspects of the labour market through policies such as the minimum wage and new parental rights. A third has been a big increase in spending on public services, perhaps the defining feature of the last Parliament, funded largely via general taxation rather than taxes on employment. There have also been big investments in the new NHS, childcare and early years education.

Put together, these changes justify a new Anglo-social label for Britain’s reformed welfare state. We now combine high employment in a service-based economy with new forms of social protection, geared to jobs, skills and family support. Britain is becoming fairer and more prosperous.

But big challenges remain. Inequality and poverty are still too high in Britain. Social mobility has stalled. Regional disparities are stark. Too many people are trapped on incapacity benefit when they want to work. And while our economy is good at absorbing migrants, our society is less welcoming.

What does it mean for FE? Colleges are the engine-room of social justice in post-16 education. It is via FE that millions of young people and adults gain the skills they need to get jobs and take part in society. FE helps people to reach the “social minimum” needed for a secure and dignified life. It also provides the key to renewing social mobility in a polarising labour market.

Our labour market will never be made up entirely of high-skill jobs that change every two weeks, as some learning gurus and management consultants would have us believe. It creates lots of lower-skilled jobs as well as high-skill ones, so we need to help people move up the occupational ladder.

And FE is the place where the necessary skills can be acquired.

FE colleges can also train the elderly and childcare workers we will need to enable women in particular to combine work and family life, supplying the new NHS with much of its workforce. FE is where new migrants can learn the English and job skills they need for economic and civic integration.

FE should be proud of this social justice role and confident in articulating it. To outsiders, FE suffers from a victim mentality, always bemoaning its relative lack of priority or complaining about government policy. It needs to find a new voice: one that celebrates its social justice purpose and uses that to help define its identity.

Nick Pearce is director of the Institute for Public Policy Research