One autumn evening a couple of years ago, my friends and I were drinking outside a pub in behind Euston station. As the last of the sun bathed the tables, a group of men and women assembled in the street. They were wearing white shirts and trousers, red neckerchiefs around their throats, bells tied to their ankles. They carried sticks. As they took their places in formation, my friends started sniggering to each other: Here they are, the racists, UKIP's morris-dancing wing.

Overt expressions of Englishess rooted in historical tradition have not, for some years, been regarded very fondly by people who regard themselves as progressive. The Englishness of the past is what leads us to Jacob Rees-Mogg labouring under the misapprehension that he is an 18th century squire, to Mark Francois apparently believing he represents a class of yeomanry who will explode if we can't stick it to Johnny Foreigner, to Niall Ferguson writing about how wonderful empire was. The belief in our exceptionalism – the island separation from the rest of the world, and the ability of this small island to paint the map of the world pink with colonies – was expressed through contempt for others. That is the England of "Two world wars, one world cup" and "ten German bombers" and smashing up European city centres when England play away and being suspicious of immigrants who come here while yearning to be an expat somewhere else.

It can be hard, if you are of the left, not to bundle everything that seems traditionally "English" into a basket labelled "best avoided". Though I have a season ticket at QPR and go to a handful of England games every year, I feel – at best – ambivalent about the English football team, and I have done since I started thinking about politics in any meaningful way. I still leap to assumptions – very possibly unfair ones – when I see a St George's cross hanging from the window of someone's home. Perhaps you feel similar emotions about other expressions of Englishness.

Of course, those of us who have surrendered the right to define Englishness have allowed the Daily Mail and the Sun – and Mark Francois and Nigel Farage – to claim it. But what is the English tradition we would take for ourselves? Leave aside modern England – forget grime, and food from around the world, and city centre streets that are global bazaars – and think of the English past. In effect, yes, think of a version of Rees-Mogg's England, but invert it, so it tells a truth not of the benificent aristocracy running their estates for the benefit of all, but of a country populated by people whose oppressions and joys would be familiar to those coming here today.

That England, I think, is represented in Fairport Convention's Liege & Lief, 50 years old this winter. It is, of course, a revered record – declared to be the most important folk album of all time at the 2006 Radio 2 folk awards, hailed as the album that invented English folk rock, a keystone in rock's frantic evolution in the late 1960s. But it remains an important album not for what it means for the past, but also for what it says about the present.

Liege & Lief is an album about class, in more than one way. Its most dramatic song is starkly about class, but the English class system suffuses its very making. Fairport themselves were middle class kids – the Fairport house, which gave the group its name, was the big home in Muswell Hill in north London in which guitarist Simon Nicol had grown up, his GP father practising from the ground floor – enraptured first by west coast psychedelia, to which they gave a polite Home Counties makeover, and then by The Band. After hearing Music From Big Pink, they realised there wasn't much point pretending to be American, and that they needed to find an English equivalent to what The Band had done. The arrival of Sandy Denny to replace Judy Dyble in 1968 enabled them to begin their Anglification. Denny was a regular on the folk circuit, had sung with The Strawbs, and she and Dave Swarbrick, the fiddle player who began playing with Fairport the following year, came to the group just at the time when their knowledge of the folk repertoire tied in with the existing members desire to trace their own musical ancestry.

But the English folk tradition is tied up in class, too. The building blocks of the repertoire – the songs that Fairport bassist Ashley Hutchings was assembling versions of in early 1969 for the band to learn – came from the song collections that had been built by the folklorists of the late 19th and early 20th centuries, who had a particular view of the tradition they wanted to preserve. As Ian Carter of the contemporary folk group Stick In The Wheel put it to me last year: "The way we see folk music now is very much dictated by how it was collected in Victorian times, mostly, when it was a pursuit of the upper classes, mostly. It's called folk music because they wanted to hear the music of the folk. The common folk of England, of the great Empire."

"Untainted by people in cities – like immigrants," added his bandmate Nicola Kearey.

"They didn't want anything influenced by outside culture, or anything that showed any kind of artiness," Carter continues. "They didn't want to know about it. They were looking for idiot savants. It's like the blues boom, where you had to be a blind sharecropper who had never heard music past a certain point. And like with Leadbelly, they wanted Walter Pardon to sing at the Albert Hall, and he turned up in his suit. They said, 'What are you doing?' Well, I've come to sing at the Albert Hall so I want to wear my suit.' They wanted him to wear his work clothes! 'But I'm singing in the Albert Hall!'"

Carter then went back to the point that opened this piece, about how we have allowed others to seize symbols of national identity. "These days wearing a poppy is seen as a symbol of being prowar, Brexit kind of person, rightwing and nationalistic. My grandparents always used to tell me the reason it started was as a grassroots thing. They knew lads were being swept in front of German machine guns by officers that didn't give a fuck about them, and it was an unbelievably arrogant, senseless use of people. You can dial that narrative all the way back to Boudicca – who should be used as a symbol of rebellion, but became a symbol of empire. That cycle messes with people's identities."

And, as Dave Harker argued in Fakesong, his 1985 history of the folk song collectors, the preservation of traditional songs served to aid and abet the agendas of governments and powerful institutions around the world: "Their support for 'folk' culture is a small but significant part of their attempts to reinforce nationalism, and to help fend off danger of the only power which can challenge them – international working-class solidarity … It is impossible (without self-deception) to consider 'national', 'peasant', 'tribal' or 'folk' culture merely as objects of academic interest, and if we can show that these general considerations apply specifically to the concepts used by even the most progressive 'folk' scholars, then those who associate themselves with bourgeois ideology will have a clearer idea of the real function of their work."

Fairport may have taken from the collections of the folklorists (and they were helped and guided by one, AL Lloyd, who, though a committed Communist, had placed himself very much in the lineage of Cecil Sharp) but Liege & Lief was an act of revolution. It was not just in the electrification of folk music – Fairport had already started drifting that way on Unhalfbricking – or in the addition of drumming derived from rock, by Dave Mattacks, who had replaced Martin Lamble after the latter's death when the band's van crashed on the M1 on 12 May 1969. It wasn't even in mixing traditional music with other forms – Pentangle had begun to do that in 1968.

Fairport's revolutionary impact came in doing precisely the opposite of what the folklorists had intended when they began collecting the songs. By taking the old songs and setting them down on paper, they had largely believed they were preserving them in the form in which they must remain, ignoring the fact that songs passed through generations orally will always evolve. Fairport, though, played extremely fast and loose with the source material, matching tunes from one source with lyrics from another. As Rob Young put it in his book Electric Eden: "It threw into question the spurious 'authenticity' of the folk versions studiously set in stone by the Victorian and Edwardian collectors. Fairport's electrifying act preserved and restored the guts and spontaneous vigour to the folk continuum."

Nor did it offer a sepia-tinted view of the past. Five of the eight songs on Liege & Lief were traditional, and they were not comforting hey nonny nos about calling in the harvest. The overwhelming theme of Liege & Lief is ordinary people denied agency, with dire consequences. They are people whose bodies are little more than vessels for the needs of others, be they sexual, material or military. There is always a power dynamic at work: women succumb to the supernatural, and the supernatural figures they succumb to represent power – they have castles, they own land (many versions of 'Tam Lin' name him as an aristocrat, enslaved in turn by the Queen of the Faeries); men succumb to the power of the state, which has no respect for the rights of the ordinary people. And so 'Tam Lin' tells of a woman impregnated by the supernatural titular character for trespassing on the forest of Carterhaugh; in 'Reynardine', a young woman is lured to a castle, where we never find out what awaits her; in 'The Deserter', a Napoleonic Wars-era soldier, who has been press-ganged into service, is forever trying and failing to escape the battlefield. And then there is 'Matty Groves'.

'Matty Groves' brings together the threads of sex and class and power in eight dazzling minutes. Little Matty Groves is spied in the crowd after church by a noblewoman – unnamed, but the wife of Lord Donald – who seduces him. She is betrayed by a servant, and Matty awakes from his tryst in Lord Donald's bed to find him standing over them. He murders both, but only after arranging his own justifications: insisting Matty strike the first blow, demanding his wife renounce her preference for him over Matty. And it ends with the most devastating announcement that, even in death, class trumps all: "'A grave, a grave,' Lord Donald cried / 'To put these lovers in / But bury my lady at the top / For she was noble kin.'"

Here, in one song, is patriarchy, class-based violence, sex-based violence. It is a song as relevant to modern Britain as anything by Slowthai or Dave. It's a song about British history that resonates with "honour killings", with tabloid sensationalism, with lives viewed as worthless because the people living them don't matter. 'Matty Groves' is as irrelevant to his rulers as those who died in Grenfell, as those who have died as a result of austerity. It's easy to imagine Jacob Rees-Mogg on LBC, if it were a news story today, explaining that if Matty Groves had any common sense, he would not have slept with Lord Donald's wife. Or Nick Conrad, the now departed Tory candidate for Broadland, explaining on his Radio Norfolk breakfast show that men do get worked up, and if a woman is going to sleep with someone else, well, she's got to expect some comeback.

Of course, there's also the music. Liege & Lief would never have connected in the way it has over the past half-century without the music. "It was radical from top to bottom," Ashley Hutchings told Rob Young. "We had respect for tradition and the material, respect for the people that had gone before, and we were radically building on it … We just leapt in and did this in a rock & roll kind of way … We weren't concerned with being historically accurate, it was rock & roll. And it blew a lot of cobwebs away. We were kind of on a crusade."

That's apparent from the first track. 'Come All Ye' is a Fairport composition, written as a statement of introduction – here is what to expect: "Come all ye rolling minstrels/ And together we will try/ To rouse the spirit of the air/ And move the rolling sky." There's nothing delicate about it: it has the swing of rock & roll, regardless of the archaic formulations of the lyric. It sets out the intent to make the ancient sound modern.

And so they did. Liege & Lief is the rare record where every individual's contribution is inestimable. One can't imagine it having been made by any other combination of individuals, from Mattacks' drumming – described as a "funky plod" by Young – through to the more showy contributions. Three individuals tend to get highlighted, for obvious reasons. Sandy Denny's voice is justly hailed – so clear and true and forthright – and the contrast between her performance style, derived from folk, and the band's, derived from rock, generates the tension that drives the music. She sang with minimal vibrato, and took nothing from the blues traditions that had given birth to rock music, while Richard Thompson would add colouration of modernity. Dave Swarbrick, meanwhile, was to Fairport as John Cale was to the early Velvet Underground, his fiddle playing making the whole sound otherworldly.

'Matty Groves', again, is the best expression of that triumvirate. Through the verses, Denny carries the melody, Thompson contenting himself with the donkey work, while Swarbrick weaves in and out, creating a drone that undulates and buzzes and fizzes around the topline. Then, come the coda, Thompson takes over, building through monotone rhythm playing towards a modal solo that begins just as an exploration of the notes immediately around the centre of the song, before gradually reaching further and further out, his hands travelling up his guitar's neck, the notes flying from his fingers. You can hear here not The Band, but another of Fairport's great loves, The Byrds – if ever a solo owed a debt to Roger McGuinn, it was this, an 'Eight Miles High' for England.

The other epic on the record, 'Tam Lin', sounds as though it looked rather closer to home for inspiration. The clipped, hard guitar chords sound for all the world like those of another Muswell Hill guitarist, Dave Davies of The Kinks – the chord progressions might be from folk, but the way they are played is reminiscent not of Bert Jansch or Martin Carthy, but of 'All Day And All Of The Night', or 'You Really Got Me'. (It's a curiosity, too, that 'Tam Lin' was very much in vogue in the late 1960s. As well as versions by Pentangle and Anne Briggs – to be expected, given the fact that all the late 60s folk singers and folk rock bands were looking to the same sources for material – it was the inspiration for a movie, filmed in 1968 but not released until 1970 called, variously, Tam-Lin, The Ballad Of Tam-Lin, The Devil's Woman or The Devil's Widow, starring Ava Gardner as a modern day faerie queen and Ian McShane as "Tom Lyn".)

Liege & Lief will live on. It will never inspire a Britpop-like movement because it is too subtle and delicate a record for that. But every year one hears some new group who have taken some part of it and woven it into their own music. They may not sound much like Fairport, but the DNA of Liege & Lief – the ancient, the supernatural, the binding of rock and folk – will be present. But the original album, one that echoes down the year just like the songs Fairport found for it did, will outlive them all. And every so often, as it does now, it will speak to the times.