IV The People’s Budget
At the beginning of 1909 three points must have been clear to the Prime Minister, the Chancellor of the Exchequer, or any other informed person who was considering the prospects of the Liberal Party. The first was that the Government was losing support in the country. Its bye-election record, which had been good during its first and second years in office, had worsened sharply. During 1908 it had been little short of disastrous. Mr. Churchill, standing for re-election on his appointment to the Board of Trade, had been defeated at North-West Manchester and had sought refuge at Dundee. And there had been other union ist gains from the Government at Ashburton, Peckham, Ross-on-Wye, Shoreditch, Newcastle-on-Tyne, and Pudsey. The Conservative leaders and organisers who predicted after the Christmas recess that a general election would give them a majority of at least twenty were not indulging in baseless optimism.
The second consideration was that no useful purpose could be served by passing through the House of Commons controversial measures of social or political advance in a normal legislative form. Unless they could be incorporated in money bills they were certain to meet their death at the hands of the House of Lords. There were only two ways in which the Government could hope to regain the initiative, to satisfy its adherents, and to rally its erstwhile supporters: by a full use of the Finance Bill, so that it achieved much more than the mere raising of a given amount of revenue; or by the destruction of the absolute veto of the Upper House.
The third factor was the Chancellor’s need in the forthcoming financial year for substantially more revenue than Asquith had raised by the previous Budget. This arose partly from the cost of the new old age pensions and partly from increased expenditure on the Navy. Of the need for this latter increase a large section of the Liberal Party (including some members of the Cabinet)1 and all the Labour and Nationalist members were quite unconvinced. It was therefore necessary that the revenue to meet this unpopular outlay should be raised in a form acceptable to most of these normal supporters of the Government.
All these considerations added up to one conclusion, and to one only. The Government’s next major move had obviously to be the introduction of a highly controversial Budget. But how much was such a Budget to be designed to accomplish? Was it to be based on the assumption that as a money bill it would be immune from the attacks of the peers, and would thus serve for the Government as an alternative to a ‘battle of the veto’? Or was it intended to provoke the peers to rejection, and thus act as a prelude to the ‘battle of the veto’? Lloyd George’s biographer, Mr. Malcolm Thomson, who is always sparing in his documentation, is at once confusing and dogmatic on the point.
‘To Lloyd George it was clear that there must be a fight to curb the Lords’ power of veto,’ he tells us. ‘But he was not prone to the dangerous miscalculation of wishful thinking, and he did not deceive himself into thinking that rates for Church Schools or reduction of public-house licences, however hotly he and some of his friends thought about them, were issues that would rouse the mass of the nation to a constitutional revolution. “Resign and appeal to the electorate!” taunted the Tories when successive Education Bills were thrown out by the Lords. “If a dissolution comes,” retorted L.G., “it will be a much larger measure than the Education Bill that will come up for consideration, if the House of Lords persists in its present policy!” He was restlessly devising how to shape that larger measure.’a
The implication of this seems clear enough, but the same cannot be said of a later passage on the same point. Here Mr. Thomson tells how, after the rejection of the Licensing Bill, Lloyd George
‘had settled his strategical plan of attack on them (the peers) and won Asquith’s approval of it. When the Old Age Pensions Bill was before the Lords, Lansdowne had dissuaded them from throwing it out on the ground that, though not strictly a Money Bill, it was essentially a Bill of a financial complexion and was linked with provisions in the Budget allotting funds for it. Finance, he admitted, was by constitutional principle the exclusive concern of the Commons, with which the Lords should not meddle. Very well: Lloyd George planned to link further measures of social reform with Finance—measures which would be acutely disliked by the Peers—and if the Upper Chamber grew exasperated enough to throw them out, it and not the Liberal Government would be violating the Constitution and making a change in the powers of the Lords inevitable!
‘Accordingly he proceeded to frame his Budget for 1909 with the threefold purpose of raising the extra funds needed for old age pensions and other intended reforms; of making provision for these reforms in the Finance Bill; and of adopting tax-raising devices which would be particularly distasteful to the Peers and might rouse them to throw out the Budget (my italics).’b