#4389 - Liberal Government 1905 1914 - 20th Century British Politics

BRITISH POLITICS AND GOVERNMENT SINCE 1900

NEW LIBERALISM AND THE 1905-14 GOVERNMENTS

What had the Liberal government achieved by 1914?

This essay will attempt to measure the achievements of the Liberal government between 1905 and 1914, by which is meant both legislative measures and any non-legislative impact which may have been the result of a shifting of the political narrative. Legislative achievements, be they the introduction of Old Aged Pensions in 1908 or the passage of the 1911 Parliament Act, cannot be credited solely to Asquith’s government; they were the result of more than a generation’s development of progressive political thought which reached its apogee during the period of our examination. Timing of reform, as well as its detail, will also be examined, and understanding the motives of those who sought to resist reform is intrinsic to our comprehension of the contemporary political and social climate. Finally, we will examine the validity of Dangerfield’s claim that the Liberals, with each legislative and electoral advance, accelerated the transition to class-based politics and sowed the seeds for their own destruction at the hands of the Labour party.

The lineage of the Liberal social reforms of the early twentieth century can be traced back to the 1890s and earlier. Clarke argues that, following the Liberal’s election defeats in 1895 and 1900, the party had exhausted ‘the political capital of Gladstonian Liberalism’, subsequently launching ‘New Liberalism’ as an attempt to re-engage working class voters¹. The party adopted much radical thinking into its manifesto, and not without dissent from those members who clung to laissez faire Liberal attitudes. New Liberalism meant responding with legislation to the plight of the poor working class; this represented a break from the late 18^th century view that humanitarian and philanthropic efforts were sufficient to ameliorate social problems². Radical Liberals argued that the party should focus on the creation of better moral and physical surroundings for the mass of the citizenry; this meant a bigger State, with all that entailed fiscally and electorally. It was recognised that, following the Second Reform Act, vast electoral power was in the hands of the working class; New Liberalism was an attempt to capture this vote, whilst genuinely improving welfare. It sought not to be a purely class movement, and avoided redistributive policies that simply involved the transferring of wealth from the rich to the poor, although this was ultimately what was required.

Before the party’s legislative goals could be achieved a wide spectrum of resistance had to be tackled. Whilst the Lords and Conservatives could be politically outmanoeuvred, the middle and working classes, as well as the Irish Nationalists and elements of the machinery of State, needed convincing that social reform was both desirable and practical. Prior to its introduction, the working class was largely hostile to the idea of social reform. They were dissuaded by the casuistic 18^th century doctrine of ‘self-help’, as well as a fear of the State as an institution of the wealthy. Such scepticism was not entirely unjustified, and Joseph Chamberlain had argued at the end of the 18^th century that limited social concessions should be made to maintain the existing social and political order and stay the advance of the Labour party. Additionally, working class objections to the administration of the Poor Law, compulsory education, national insurance, and local authority housing policies³ had to be overcome. The middle-classes had little enthusiasm for the idea of social reform, particularly as the weight would fall on their shoulders, and the Liberals sought to assuage their fears and bridge the gap in interest. Tax policy was formulated with the middle-class in mind, and an argument was made for the Nation’s economic health being dependent on the distribution as well as production of wealth.

Major social reforms could only be built upon a solid fiscal foundation, and the 1909 People’s Budget aimed to lay this; the overcoming of intense resistance to the budget, and the subsequent constitutional precedent set, represents among the most significant achievement of the Liberal government. Asquith’s 1907 budget had provided an indication of his government’s future fiscal plans, notably distinguishing between earned and unearned income; the taxing of the latter deemed the more desirable, as it preserved incentives for individual effort. But it was the 1909 budget which dramatically implemented most of the fiscal policy which the Liberals had been planning. The party sought to finance social reform without tariffs or attacking the middle-classes. The Conservatives and elements of the Liberal party favoured a broadening of the base of taxation, encompassing tariff reform. Lloyd George was able to totally reject this, arguing that a graduated income tax was not only needed to provide the necessary revenue, but that it also embodied the New Liberal mantra of equality of sacrifice. Income tax remained unchanged for incomes under 2000, protecting the overwhelming majority of the middle-class, and it increased on a graduated scale for higher incomes. Murray argues that the budget represents the first major step in the transition to class-based politics⁴, something elements of the Liberal party felt would be to their long-term detriment. However, it is arguable that class based politics had arrived a generation earlier and, without the benefit of hindsight, class-based concessions by the Liberals made partisan sense.

Increasing government expenditure and taxation was not a Liberal epiphany. The achievement lies in the scale of the fiscal changes, and the fact that the money was being spent on social reform rather than Imperial purposes. Nevertheless, Lloyd George hailed it as a ‘war budget...for raising money to wage implacable warfare against poverty and squalidness’. Government expenditure rose by 60% in real terms between 1895 and 1915; yet despite this vast increase the 1909 budget delivered a surplus of 3million. The People’s Budget saw the creation of a new fiscal doctrine. Taxes would grow in yield with the demands of the State, they should not injure trade or commerce, and all classes should contribute fairly and in proportion to their income. Passing a modernizing budget such as this constituted as much of an achievement as drafting it. Whilst Redmond, leader of the Irish Nationalists, was offered concessions over spirit and license duties in return for his party’s support of the budget, the Conservative dominated Lords was to prove more difficult to overcome.

The ability of the House of Lords to act as an instrument of party warfare was immeasurably reduced with the passage of the 1911 Parliament Act. Whilst a significant achievement, this Act was not anticipated necessary. Lloyd George did not believe the Lords would meddle with a finance Bill, and he therefore thought it could be used to achieve radical objectives over their legislative veto. Conversely, the Lords hoped that by vetoing the budget they could force a General Election and a change of government. Both parties found their assumptions flawed. The coalition that followed the 1910 General Election successfully appealed to the new King and, under the aegis of George V’s threat to create hundreds on new Liberal peers, Lords passed the Act by a majority of 131-114. Along with the introduction of MP’s salaries in the same year, the Parliament Act constituted a significant weakening of the influence of the landed classes on British politics.

Before the battle over the People’s Budget had been fought and won, the Liberals had already introduced another revolutionary piece of legislation: old aged pensions. In 1890, 68 of every 1000 Britons aged 65-70 were workhouse paupers; a further 125 were on outdoor relief. Arguments against the workhouses varied, but included the fact that they were too attractive to the idle unemployed, attempted to distinguish between deserving and undeserving poor, and did not care for the helpless in a dignified or nationally consistent manner. After the 1906 election, Asquith was convinced by elements of his own party, Labour MPs, and the results of several select committee reports of the need for old-aged pensions. His real problem was not the ideological resistance of the Conservatives, who favoured contributory pensions, but a shortfall in government revenue. The Treasury resisted spending more than 7million per year on pensions, which necessitated a raising of the proposed pension age from 65⁵. Despite resistance, the 1908 Old Aged Pensions Act granted non-contributory pensions to all Britons over 70, subject to certain conditions. Provided they not been imprisoned during the prior 10 years, or deemed by their borough to be habitually work-shy, pensioners would receive 5s a week, means-tested and provided on a sliding scale for those with an income of less than 26pa. The old aged pension can be viewed as the first major policy achievement of a determinedly reforming progressive alliance. Its immediate impact was reduced by certain limitations, principally a life expectancy among the poor of less than 55, but it quickly became an entrenched reform that the Conservatives dared not repeal.

The debate over the provision of State benefits encompassed ideological arguments about freedom and dependence, redistribution and self-help. The old pension was provided on a non-contributory basis, but the Liberal’s health and...