Over the past decade there has been radical change in the British welfare state. The Government has introduced a new welfare contract where the rights and responsibilities of working age adults receiving state benefits have been redefined to encourage, and increasingly require, their active participation in paid employment. This has involved a parallel activation of entitlements and obligations and of the services delivered by welfare state institutions. This chapter considers the new combinations of job search assistance, obligations and programmes; and make work pay reforms, introduced in Great Britain (GB) since 19972. It assesses evidence on the impacts of the strategy and the challenges faced as activation requirements are extended to workless lone parents and people with health problems and disabilities. The British case merits attention for several reasons. Firstly, New Labour has sought explicitly to synthesise what works from both neo-liberal and social democratic welfare traditions with some analysts discerning the emergence of an 'Anglo-social welfare model, incorporating and reconciling economic performance and flexibility with equality and social justice' (Dixon and Pearce, 2005, p. 81). Secondly, the persistent high levels of unemployment that characterised Britain in the 1980s and early 1990s have been replaced by low levels of unemployment and high levels of labour force participation. Credit for the success of the British strategy has been attributed to labour market flexibility and adept macro economic management. This chapter more narrowly considers the particular contribution made by activation and redistribution through the tax and benefit system.