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It's a bit complicated now, but you're right, historically.
The Liberal party and Conservative party formed as the two dominant parties in the mid 19th century - Tories roughly being for landowners, and the Liberals for businessmen (they took up their positions from earlier parties over a free trade v. tariffs argument). Each hoped to attract working class men as voters as the franchise was expanded from the previous 'property-owning' restriction. The Liberals were a bit more successful at that, and by the early 20th century were clearly more progressive (introducing state pensions, restricting the power of the hereditary House of Lords, that sort of thing). But at that time the Labour party rose, closely linked to unions (but also with some democratic socialist input). After WW1, the Liberal party imploded, and Labour quickly became the other main party.
The Liberals limped along as a centrist party, until a split in Labour in the early 80s crested a new party - the Social Democrats, who felt Labour was going to go hard left. They had a brief surge of popularity as a 'brand new' party, and formed an alliance with the Liberals. But they didn't have electoral success (in the 1983 election the alliance got 25% of the vote, but only 3.5% of the seats - what can happen to a 3rd party in a first-past-the-post system). Eventually the 2 parties merged to form the Liberal Democrats in the late 80s.
So you'd tend to think of the Lib Dems as centrist, overall; but pretty liberal on social matters. However, Tony Blair and the 'New Labour' project of the 90s took the Labour party leadership further to the right than the Social Democrats had been, and as a result, we had things like the Lib Dems at the last election wanting a top tax rate of 50% for those earning over £100,000, while Labour wanted the top rate at 40%. And the Lib Dems opposed the Iraq invasion.
However, there are still many 'old Labour' supporters, and some MPs too, who are still proud to call themselves socialist. So Labour spans a fairly wide range. And on social matters, some Labour people can be pretty old-fashioned. For that matter, the Lib Dems have a certain range too (eg some of them suggesting privatising the Post Office, not long ago); and the Tories range from 'compassionate conservatives' who can seem human, to anti-immigration, anti-European, ultra-free-market types who would fit right in with the worst of the Republicans today (although they are fanatical pro-monarchy too).
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