This rather chimes with my view that the coalition will be looking at changing the relationship between the citizen and the State.
There are, of course, liberals who do wish to reduce the State as well as the small State Tories that Astle mentions. In fact, some liberals want no State at all.
Arguably, it isn't just about the size of the State. A small State is still a State and can be authoritarian in nature.
Perhaps the difference between those who want a night watchman State and modern liberals is in the argument over the purpose of the State. The libertarian view is that the State's only function is to ensure liberty by defending the State and keeping a system of justice running.
The modern liberal is more concerned with the things that prevent freedom. They are more interventionist in that sense. This view sees poverty as something that stops people being free and these liberals want to do something about it.
One option is to pursue social democratic public policy. It is this approach that led liberals towards the Labour party.
Another approach is to tackle the problem of poverty in another way: the night watchman becomes the day porter doing things like ensuring children get an education that equips them with the skills and knowledge that leads to a successful future.
The problem is that by using the State to ensure freedom, as opposed to guaranteeing liberty, the State can be used by others to do other things. Then there are unintended consequences that can lead to increased poverty.
If one follows Julian Astle's route of redefining the State there is another potential unintended consequence. People might come to like more freedom and having control over their lives. If they do, it might be the voters who reduce the State regardless of the intentions of the politicians.