Development of the novel in England probably started with the novel's forerunners in Europe, widely read by English writers at the beginning of the 18thC--chiefly, works like Francois Rabelais'Gargantua (1534) and Miguel de Cervantes' Don Quixote de la Mancha (1605).
The key to the development of the novel in English literary history is a concept known as verisimilitude, that is, the writer's ability to make his story true to life using characters and events everyone can recognize as existing in the real world. Daniel Defoe is the most likely candidate for the first true novelist in English literature, using fictitious characters, generally from lower walks of life, and loose narrative structures in Robinson Crusoe (1719, based on a historical character), Moll Flanders (1722), and Roxana (1724). Jonathan Swift's Gulliver's Travels (1726) introduced allegory (something in the text refers to a greater meaning outside the text) but kept the allegorical elements believable because Swift's use of verisimilitude allowed his characters to act in ways every reader could recognize.
By the mid-18thC, writers like Samuel Richardson, Henry Fielding, and Tobias Smollett had written a number of novels, using different narrative techniques to advance the plot, that provided readers with a realistic depiction of life in England. Perhaps the greatest of these is Fielding's Tom Jones (1749) because it demonstrates Fielding's extraordinary skill in creating true-to-life characters from all walks of life and a highly-intricate plot that wraps up neatly at the end of the novel. The 18thC English novel, almost without exception, ended like a modern fairy tale--all is well. One novel--Tristram Shandy (1760-67) by Laurence Sterne--broke from the traditional narrative and character development forms by focusing much of the novel's energy on the inner self, a psychological focus that confused many of the novel's readers (and still does).
By the end of the 18thC, it is safe to say that the novel had achieved its form in plot, character development, narration, and form. Beginning with the 19thC--with Jane Austen, Charles Dickens, Scott, Trollope, Thackeray, and Hardy--the focus of the novelist shifted to different segments of society and time periods, but the novel as a form was essentially developed in the 18thC.
In the 20thC, novelists like James Joyce and Virgina Woolf began to focus on narrative techniques like stream-of-consciousness, trying to depict the workings of the mind, with all its ambiguities, and how the external world is perceived in a character's mind. The novel was cut loose a bit from the concept of verisimilitude because the novelist began trying first to depict accurately the working of a character's mind rather than to describe a character's place in the external world.