Liberal Government 1905 1914 Notes

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...

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