This paper revisits the crucial period following the Arab oil boycott of 1973, when the welfare state in the UK finally collapsed along with the heavy industrial base upon which it rested. Unlike the post-war welfare-state "settlement", the new post-welfare market state was imposed by Margaret Thatcher's governments. It was marked for vocational education and training by the 1988 Education Reform Act and the 1992 Further and Higher Education Act. This legislation was part of what has been called "a succession of Acts of Parliament...[that] mark the most decisive break in British social policy since the period between 1944 and 1948". The paper revises and refines previous accounts to suggest that this outcome was not inevitable, nor is it sustainable, and that it is best comprehended as a new type of state formation.