A bachelor's degree traditionally meant that the recipient had obtained a general education (specializing at this level is a relatively recent nineteenth-century development).
A master's degree is a licence to practise. Originally this meant to practise theology, that is, to take a living in the Church, but now there are master's degrees across a whole range of disciplines: business administration, soil biology, computing, applied linguistics and so on. The degree marks the possession of advanced knowledge in a specialist field.
A doctor's degree historically was a licence to teach - meaning to teach in a university as a member of a faculty. Nowadays this does not mean that becoming a lecturer is the only reason for taking a doctorate, since the degree has much wider career connotations outside academia and many of those with doctorates do not have academic teaching posts. The concept stems, though, from the need for a faculty member to be an authority, in full command of the subject right up to the boundaries of current knowledge, and able to extend them. As the highest degree that can be awarded, it proclaims that the recipient is worthy of being listened to as an equal by the appropriate university faculty.
Traditionally the doctorates of British universities have been named for particular faculty, for example: DD (Divinity), MD (Medicine), LLD (law), DMus (Music), DSc (Science), DLitt (Letters, i.e. Arts). These so called 'higher doctorates' are awarded as a recognition of a substantial contribution to the discipline by published work. In British universities Doctor of Philosophy degree is a comparatively recent concept - an early twentieth-century import from the United States. Some universities abbreviate the title to DPhil (e.g., Oxford, Sussex, York) but most use the designation PhD. Whatever the abbreviation, the degree is the same. It represents a more restricted achievement than the higher doctorates since it envisages a limited amount of academic work (three years or so), but it still embodies the concept that the holder of the PhD is in command of the field of study and can make a worthwhile contribution to it.
There are a number of exceptions to these descriptions of the meaning of the degree titles, since British universities pride themselves on their independence. Traditionally, once an institution had become a university there were no laws that specified which degrees could be awarded, by which institutions, to whom and on what basis, as was the case in Continental Europe. This has now changed, as the Government has decided to designate certain Higher Education Colleges as `Teaching Universities', without giving them the right to award research degrees.
Historically this independence has allowed, for example, the arts faculties of traditional Scottish universities to use the MA title for their first degree, but the science faculties use BSc. Traditionally there was no extra examination for an MA degree at Oxford and Cambridge, only a requirement to continue attendance at a college for a further two years. Nowadays this has been reduced to paying a registration fee after two years and obtaining the degree without attendance. In medicine the practice is even stranger: general medical practitioners are given the honorary title of Doctor although they do not have a doctorate from their universities. Indeed, on the basis of their university course they are credited with two bachelor's degrees, although having a licence to practise they exemplify the concept of a master's degree.