#4388 - Liberal Government 1905 1914 Notes - 20th Century British Politics

The People’s Budget: B.K. Murray

- The period between the end of the Boer war and the start of WW1 saw an upward trend in government spending – primarily on defence and social reforn.

- The financing of reform was a key battleground between the Conservative and Liberal parties. The Conservatives favoured a broader base of taxation, including tariff reform. The Liberals sought an increase in direct taxation.

- Lloyd George’s ‘People’s Budget’ was a clear choice to increase direct taxation. Social protection was to be provided by redistribution rather than insurance amongst the working classes of the kind partially organised by the Friendly Societies.

- In 1909 the Liberals tried to raise expenditure on both old aged pensions and the navy. There had been a transition to class-based politics. The Liberals gained the support of much of the working class, at a cost of the support of middle-class voters and employers.

- Split: traditional laissez-faire Liberals were resistant to State intervention in the market economy. New Liberalism ended following a schism in the face of the 1914 budget.

- The 1909 budget was a leap which implemented most of the fiscal policy which the Liberals had been planning. Liberalism was beginning to create a coherent ideology of social reform.

- Some in the party felt that the budget would promote class-based politics to the long-term detriment of the Liberals.

- The 1910 election cost the Liberals their majority in the Commons.

- They now needed the support of the Irish nationals and Labour

- 1911 Parliament Act, National Insurance Act, MPs salaries.

- The 1914 budget saw a significant increase in income tax.

- The Liberal’s problem: how to finance social reform without tariffs or attacking the middle classes.

- Government expenditure rose by 60% in real terms between 1895 and 1915.

- Asquith took over from Campbell-Bannerman in April 1908. By 1908 no coherent plan of social reform had been devised by the government.

- From 1892-95 the Lords had been consistently used as an instrument of party warfare – they destroyed Gladstone’s second Home Rule Bill.

- 1909 – Lloyd George did not believe the Lords would meddle with a finance Bill – he therefore thought it could be used to achieve radical objectives over there veto. Conversely, the Lords hoped that by vetoing the budget they could force a General Election and a change of government.

- Lloyd George said the budget had three purposes:

1) Taxes should grow in yield with the demands of the State.

2) Taxes should not injure trade or commerce.

3) All classes should contribute fairly and in proportion to their income.

- Unionist opposition centred on the fact that the budget was felt to be the first step in a war against the propertied classes.

- The budget was also deeply unpopular in Ireland, where spirit and licence duties hit publicans and distillers hard.

- Redmond, leader of the Irish nationalists, threatened to side with the Unionists and defeat the budget in the Commons unless he received concessions.

- The 1909 budget delivered a surplus of 3million.

- Impact of the budget:

- Modernization of the tax system

- Financing of the welfare state

- Defeat of tariff reform

- Neutering of the House of Lords

- Re-opening of the Irish question

- Strengthened the Liberal party temporarily – led to a split over the 1914 budget.

- Fiscal reform was a necessary precursor to social reform, which the Liberal party sought to enact without antagonising the middle classes, business, or their own factions. This did not prevent the loss of working class support to Labour.

The New Liberalism: N. Freeden

- Social reform calls grew from a greater awareness of the plight of the poor. Initially humanitarian/philanthropic, nothing was seen to be intrinsically wrong with the industrial system.

- Russel, in 1885, wrote that the purpose of Liberalism should be the creation of better moral and physical surroundings for the mass of the citizenry. By the 1890s, vast electoral power was in the hands of the working class, and they were becoming a dominant factor in British political life.

- Redistribution was not simply transferring wealth from the rich to the poor. Economic health was deemed to depend on distribution as well as production of wealth, whilst emphasising self-reliance.

- There were fears that income tax would interfere with industrial incentives. Taxing unearned income preserved individual effort. Graduated taxation encompassed the principle of equality of sacrifice.

- Liberals believed that if Britain could afford large sums for military expenditure, it could divert it to social reform.

- The Liberal’s duty was to meet the continuous demand for improving popular welfare.

- Once the party came to power in 1906 the social reformers, despite their minority, did much of the policy formation.

- The Liberal party could not contain the rise of Labour because its leaders could not keep pace with the advance of Liberal thought.

- The middle class had little sympathy with the idea of social reform, particularly as the weight would fall on their shoulders – the Liberals sought to assuage their fears and bridge the gap in interest.

- Liberalism aimed not to be a class movement, but instead a form of statecraft.

- The Liberals made significant legislative advances between 1905 and 1914, but there was still a gulf between policies and ideas – were advances of a particularly Liberal nature, or was this an all pervasive set of ideas?

- There was much on the Liberal programme that would be endorsed by the Labour party, and vice-versa. Labour, however, embraced more policies to directly tackle social inequality.

- Did the Liberals tackle the housing crisis and land reform?

- Old-aged pensions were a priority and would simultaneously serve a humanitarian and economic need.

- Unemployment reform – the poor law failed to distinguish between those unwilling and those unable to work. Insurance was a tax on the poorest.

- Unemployment was not considered society’s problem, but the welfare of its members was.

- 1906 Education (provision of meals) Act

- 1911 National Insurance Act

Unemployment and Politics: J. Harris

- 1905 Unemployed Workmen Act:

- Radicals and Labour saw it as a ‘right to work’ Act – something the Liberals wanted to avoid and Unionists strongly resisted. Provided workman with limited hours to prevent destitution but deter dependence.

- Government sponsored employment was found to damage labour mobility, destroy incentives to work, and hinder poor boroughs disproportionately. A national rather than local scheme was required.

- High unemployment during the winter of 1903/04 brought tariff reform back on the agenda.

- Liberal remedies for unemployment fell into two categories from 1903-06:

- Land revival, equal rates etc

- State intervention in education and industry.

- Taff Vale?

- Progressive taxation allowed the burden of public spending to be carried by those most able, rather than consumption taxes which burdened the poor. It was also seen as a pre-requisite for: social, naval, and military reforms.

- Voluntary and local efforts had been proved inadequate to deal with unemployment. By 1908 it was widely accepted by politicians that a national remedy was required.

- The Liberals did not attempt to tackle all forms of unemployment. The ‘unemployable’ and casual workers were left untouched. Juvenile labour was not dealt with – no raising of the school leaving age?

- 1910 Education Act (choice of employment)

- Main foci:

- Labour exchange to reduce frictional unemployment – exchanges were meant to organise the unemployed, but Harris argues that their impact was exaggerated and they may have simply filled posts that would have been filled by direct application. They also served as administrators for unemployment insurance and aided de-mobilization after the First World War.

- National Insurance Act to relieve unemployment in certain industries – The NI Act was designed not just for benefits, but also to penalise casual employment and encourage stability in the labour market. Employers resisted decasualization. Amendments to the Act relaxed penalties for workers.

- Development Act to ameliorate the impact of cyclical depressions in trade – this failed to effectively promote schemes for economic development. Local authorities were reluctant to initiate large capital projects. The Commission was not proactive and spent only a fraction of its budget between 1910-15.

The Progressive Movement in England: P.F. Clarke

- ‘Progressive’ was used to describe a working alliance between elements of the Labour and Liberal parties.

- Since the Second Reform Act, the Liberal party struggled to gain and maintain working class support. Liberal focus on ‘high politics’ meant there was a tendency for the party to alienate working men.

- New Liberals saw the costs of Empire as a direct threat to the financing of social reform.

- The Labour Party which emerged as a parliamentary force in 1906 was the result of trade union developments in the late 1880s. By 1910, the electoral performance of Liberalism had a distinct class character.

- 1908 – Old Aged Pensions

- There persisted an attempt to distinguish between deserving and undeserving poor.

- Asquith’s 1907 budget helped the middle class by distinguishing between earned and unearned income.

The Working Class and State Welfare, 1880-1914: P. Thane

- Prior to its introduction, the working class was largely hostile to the idea of State welfare, dissuaded by notions of self-help and fear of the State as an institution of the wealthy. There...