Constitutional Crisis People’s Budget 1909

This entry is part [part not set] of 15 in the series Reformers and Radicals
This entry is part [part not set] of 5 in the series Reforming Women
This entry is part [part not set] of 6 in the series Reform

Constitutional Crisis 1909-11 of the People’s Budget and Parliament Act

Winston Churchill Lloyd George Edward VII and the Peoples Budget Asquith Undone? David Lloyd George and Winston Churchill, the ‘radicals of their day’ pictured together in 1907,[/caption]

Constitutional crisis 1909-1911 what was it and why did it matter? It was towards the end of the short reign of Edward VII, matters were serious enough that Edward introduced his son to a cabinet minister as ‘My Son, the Last King.’ It would involve Winston Churchill and Lloyd George and lead to one of the key changes to Parliament in the 20th Century and there were not many and possibly for many years to follow.

What could bring a King to contemplate the end of the monarchy? In this the 800th Year since Magna Carta (2015), what place did a breach of our unwritten British Constitution have in our parliamentary process? The issues were the same as they had been back around 1215 ‘the Barons’ wanted to decide what the taxes would be and this time they were going to dig-in and bring the government down if they had to.

The Lords and barons made a fatal error

The Lords and the Barons made a  fatal error that would hasten the demise of the world they sought to cling on to. It was an act of foolish endeavour but passions were running very high. David Lloyd George (Liberal Chancellor) was leading the charge and Winston Churchill was his supporter, this was a radical attack on the old establishment by the Liberals who were brave enough politically and personally to actually try to change and improve social conditions for those less well-off in society. Their own Prime Minister at this time was Herbert Asquith and whilst he supported them he became uncomfortable with how heated and explosive the People’s Budget had become. Imagine how powerful the combination of LLoyd George and Churchill must have been at that time.

LLoyd George and the Peoples BudgetLloyd George would be remembered for generations to come for his authenticity irrespective of party allegiances and Churchill well we know what happened there.

Germany was in parallel already exercising its military might and expanding its navy. There was a call and need to keep pace,to build more warships and a genuine conflict of what the budget should be used for and where the taxation would come from to meet all the conflicting priorities.

You may have heard about the People’s Budget but certainly the key act that was subsequently entered on the statute book would hardly raise an eyebrow with its title, the Parliament Act of 1911.  This was a constitutional crisis, it provoked two general elections and finally enabled the balance to be determined in the favour of the Commons vote. There were other  critical related issues and the danger of a Lords rebellion on those issues was also of concern to Asquith not least of all in regards to the thorny issue of Irish home rule.

Lloyd George and Churchill both Prime Ministers during World Wars

To witness these proceedings in the Commons and Lords must have been quite something. The main protagonists of Lloyd George and Churchill would both become Prime Ministers in the very testing circumstances of a country engaged in a world war, Lloyd George (1916-1922) and Churchill in WW2. There must be few people capable of shouldering such burdens willingly and what an intriguing combination of talents to have in the Liberal Party at that time.

The People’s Budget 1909

The People’s Budget was devised by David Lloyd George as an instrument of social change and reform. It was designed to deliberately provoke the all too comfortable House of Lords and revive the flagging Liberal Party. The Liberal Party had a significant majority when they came to power ii 1905 and now Lloyd George made Chancellor in 1908 thought they needed to get on and do something substantial. He did not pull his punches:

‘to cope with the social condition of the people, to remove the national degradation of slums and widespread poverty and destitution in a land glittering with wealth’

Lloyd George

The proposal would seek to:

  1. Increase direct taxation on Alcohol, Tobacoo and introduce a Motor Car Licence.
  2. Income Tax would be increased and a new Super Tax imposed upon the rich and wealthy. It is not difficult to see immediately what would exercise the Lords into full voice already.
  3. But then there was the fatal blow below the aristocratic belt and directly aimed at the land owners, a controversial duty of 20% on the Unearned Increment (broadly capital gains) o land value, payable  on transfer of the property title (ownership.)
  4. The Liberals proposed to start to make the improvements in social provision which be believed with others were so badly needed. This was a budget quite plainly for the people, The ‘People’s Budget.’

Parliament was not yet fully democratic whilst the Lords could block legislation passed in the Commons by the government of the day

It is the start of the 20th century, surely by this time democracy is assured? Not quite was the reality, this is so near the end of the Victorian period, Edward VII is a competent King and has sought to help modernise the monarchy. Edward has not had much time and has taken a view that his role is largely to be a constitutional monarch which was quite wise.  The House of Commons was gradually becoming more representative of the people but quite slowly and the House of Lords was still largely full of hereditary land owners and the occasional new magnate of the industrial age.

The People’s Budget was overwhelmingly rejected by the House of Lords, hardly surprising but this time Lloyd George intended to persist, whether by design, or just by consequence this time there was going to be a confrontation. In accordance with the ‘unwritten’ constitution there was a convention that on anything of financial consequence the Commons vote would carry unopposed in the Lords, even if there were tactical objections but this time the Lords was not observing the agreed protocol.

This issue would create havoc, spark two General Elections and lead the King into becoming embroiled in this political battle. Edward VII  was said to be seriously concerned that not only the Government but the Monarchy itself might be at risk. He pleaded with the Lords, in effect the “King’s Barons” to pass the budget, resulting to agreeing to create additional Liberal Peers to help the Budget pass through the Lords when almost begging Asquith to form another government.

This was a very acrimonious process and was one of the few times in the 20th century when the stability of British  government was seriously in the balance from a constitutional perspective. The popular art and political cartoons of the day speak volumes for the unrest caused not just in Parliament but also amongst the public. Indeed the Liberals would struggle to return a majority despite fighting for the common man they lost 100 seats in the debacle to get re-elected. The electorate of course were still not all people,  even after the 3rd Reform Act in 1884, only 60%  of male householders over the age of 21 had the vote and Women still had no vote. It wasn’t that democratic a Britain that could have Victoria on the throne for six decades but still not think that women should be able to vote.  Public opinion was definitely at least split and Lloyd George is said to have been shocked that popular support for their People’s Budget was not more overwhelming.

Liberal radicals leading from the front rank

Lloyd George was a genuine reformer he was actively campaigning to do away with the punitive tradition of the Old Poor Laws of England, which had led to the Victorian Workhouse system. He wanted to change the fundamental mentality and social constructs that had treated the less fortunate so badly.  This is all happening in the period coming out of the Victorian period when despite the wealth creation for the upwardly mobile, the poor and vulnerable had still been left in dire need of assistance.

In 1908 both Lloyd George and Asquith were already working to take the steps forward that would

 “lift the shadow of the workhouse from the homes of the poor”.

Provisions for Old Age and Unemployment were they really that radical?

Old Age was one of the worst causes of poverty when people were too old to work and simply had too little provision and families who were struggling already themselves and could not help them. Old Age Pensions was one element of their new social reforms and Winston would also propose a form of unemployment insurance as well, which would be defeated in the melee that ensued the People’s Budget in 1909. The intentions were good but the level of opposition they encountered from the ruling landed classes was extraordinary and harked back as Lloyd George had said to the draconian Old Poor Law that had its origins back in the 15th and 16th centuries.

But what had the Liberal party intended to do with this budget and who was supporting Lloyd George in his radical front ranks? The frustrating early years of the Liberal government put the party at risk from the emerging Labour movement. If they could not bring home advantage for the common man because of being constantly blocked by the House of Lords, what kind of House of Commons was it? Tactical maneuvers on all sides had to be finally out-witted by outright Liberal confrontation. Both Asquith and Winston Churchill supported the budget, even when weighed against the pressing demand to build a fleet to keep pace with the expanding German Navy. They believed that without a substantial tax on the well-off yet again the poor would suffer because the warships had also to be funded. Winston would cross the house and party lines several times in his career and it’s interesting how despite his background and aristocratic heritage that he was standing-up  against his traditional ‘peer group’ at least with Lloyd George in this instance for those less fortunate than himself. Whilst Lloyd George droned on for hours in a poor presentation of the budget, not his usual style, Winston would be eloquent in his support for funding and social welfare in its early form for those in greatest need.

Audio files of Winston Asquith and Lloyd George are available to listen to online:

  • Listen to Winston’s speech example about the People’s Budget 1909 taking taxation off food and making land cheaper
  • he is followed by Asquith’s more restrained and calming approach, he was Prime Minister at this time
  • then Lloyd George, its great to be able to hear their voices, these audio files are brilliant its as if they are talking and you are there.
  • These with the scripts and documents on the Parliamentary archives enable us all to directly access the source documents. No wonder they try to teach these source document techniques in Schools now, so much more interesting.

There was already a convention that the Lords would give way on matters with a financial basis when the Commons had already decided to pass a bill, budget or instrument but on this occasion the fury was so great that the landowner’s against the commoners pretty much polarised the vote.

Unwritten Constitution was broken, the lords had sought to question the supremacy of the Commons

Winston had crossed the floor to the Liberal benches over Free Trade and some of his finest speeches are on that subject but he also became very eloquent with his normal passionate zeal in favour of these social reforms. The essence of what is democracy was brought into question and hence whilst we all sing a jolly tune in praise of what Magna Carta represents this year, some 800 years on lets remember this crisis and that not only was there little social justice for the poor, but there was not even 1 man or woman 1 vote. Given how long it is since Magna Carta, it was an awful lot longer time, in fact until the People’s Budget controversy before some of these inequalities would start to be addressed.

Eventually after Two General Elections the People’s Budget in modified form was passed

But something had changed and for once the ‘unwritten rules of the British Constitution’ had not been adhered to. The Lords had sought to more than frustrate but openly to defeat and repudiate the will of the people. By any standards that could not be allowed to insinuate itself as an acceptable precedent on our unwritten constitution. So the question remains with two elections the huge cost and impact on the British Economy, the death of Edward VII and his son George V ascending to the throne they had better sort it out quickly. Matters and concerns on multiple international fronts were growing and in particular the German question was also calling for political attention.

The Solution would be the Parliament Act 1911

The solution in 1911 would be the very innocuous sounding Parliament Act but what would that consist of and would it hold true and strong? Simon de Montfort held the first Parliament on the 20th January 1265, this year (2015)  commemorates with Magna Carta 800 the 750th anniversary of that first glimmer of representation amongst the elite. Worth reflecting how many hundreds of years later ‘the people’ were still fighting to establish and protect the right to true democracy.

This ‘People’s Budget’ remains significant more than a century later.  It promoted the Parliament Act onto the Statute Books in 1911 for the avoidance of any doubt in the future which was needed and hence the right of the government of the day to appoint life peers and a proportion by the opposition. But not all men still had the vote, and women were already fighting for heir own basic rights, the fight for social justice had only just begun.

Let Lloyd George have the last word on this

Lloyd George may have gone on too long in his four hour speech on the day, its surprising anyone was still listening but there were a few gems that still resonate today including this tirade in response the the Lord’s objections. Irrespective of our political persuasion his words are still powerful now worth listening to and thinking about, is he a socialist in a liberal voice or vice versa? He didn’t pull his punches and in this last photo you can see he could command a crowd.

“The question will be asked ‘should 500 men, ordinary men chosen accidentally from among the unemployed, override the judgment – the deliberate judgment – of millions of people who are engaged in the industry which makes the wealth of the country?’ Lloyd George as Prime Minister still talking to the People 1919That is one question. Another will be, who ordained that a few should have the land of Britain as a perquisite; who made 10,000 people owners of the soil, and the rest of us trespassers in the land of our birth…?”
Lloyd George

Today we may as a society question and criticise our politicians but at least we can all have the right vote them out.

Watch for the next part of this short series and how the Parliament Act ensures such turmoil cannot be repeated. If you would like to take a further look then click on these links 20th Century, Social Change and Power and Politics and watch for the next part of this short series.

More to read and share: some more sources and artefacts to take a look at:

  1. David LLoyd George 1909 Limehouse Speech on Peoples Budget, Parliamentary Archives
  2. Quotation ‘Special reasons’ which include the funding of old age pensions, relief for the poor and agricultural landlords recognising their obligations. Lloyd George Notes from the Peoples Budget 1909 in Parliamentary Archives
  3. Budget Finance Bill re taxation finally made law April 1910
  4. 1909 King’s handwritten letter to LLoyd George in respect of the budget
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