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The 1909/1910 People's Budget was a proposal of the Liberal government that introduced unprecedented taxes on the lands and incomes of Britain's wealthy to fund new social welfare programmes. It passed the
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in 1909 but was blocked by the
House of Lords The House of Lords, formally The Right Honourable the Lords Spiritual and Temporal of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, is the of the . Membership is by , or . Like the , it meets in the . ar ...

House of Lords
for a year and became law in April 1910. It was championed by the
Chancellor of the Exchequer The chancellor of the Exchequer, often abbreviated to the chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and the chief executive officer of HM Treasury, Her Majesty's Treasury. As one of the four Grea ...
,
David Lloyd George David Lloyd George, 1st Earl Lloyd-George of Dwyfor, (17 January 1863 – 26 March 1945) was a British statesman and Liberal Party The Liberal Party is any of many political parties A political party is an organization that coordinat ...

David Lloyd George
, and his young ally
Winston Churchill Sir Winston Leonard Spencer Churchill, (30 November 187424 January 1965) was a British statesman who served as Prime Minister of the United Kingdom The prime minister of the United Kingdom is the head of government The hea ...

Winston Churchill
, who was then
President of the Board of Trade The president of the Board of Trade is head of the Board of Trade The Board of Trade is a British government body concerned with commerce and industry, currently within the Department for International Trade. Its full title is The Lords of the ...
and a fellow Liberal; called the "Terrible Twins" by certain
Conservative Conservatism is an aesthetic Aesthetics, or esthetics (), is a branch of philosophy that deals with the nature of beauty and taste (sociology), taste, as well as the philosophy of art (its own area of philosophy that comes out of aest ...

Conservative
contemporaries.
William Manchester William Raymond Manchester (April 1, 1922 – June 1, 2004) was an American author, biographer, and historian. He was the author of 18 books which have been translated into over 20 languages. He was awarded the National Humanities Medal Step ...
, one of Churchill's biographers, called the People's Budget a "revolutionary concept" because it was the first budget in British history with the expressed intent of redistributing wealth equally amongst the British population. It was a key issue of contention between the Liberal government and the Conservative-dominated House of Lords, leading to two
general election A general election is a political voting election where generally all or most members of a given political body are chosen. These are usually held for a nation, state, or territory's primary legislative body, and are different from by-election ...
s in 1910 and the enactment of the
Parliament Act 1911 The Parliament Act 1911 (1 & 2 Geo. 5 c. 13) is an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the of the , the and the . It alone possesses and thereby ultimate power over all other politica ...

Parliament Act 1911
.


Overview

The Budget was introduced in the British Parliament by
David Lloyd George David Lloyd George, 1st Earl Lloyd-George of Dwyfor, (17 January 1863 – 26 March 1945) was a British statesman and Liberal Party The Liberal Party is any of many political parties A political party is an organization that coordinat ...

David Lloyd George
on 29 April 1909. Lloyd George argued that the People's Budget would eliminate poverty, and commended it thus: The budget included several proposed tax increases to fund the
Liberal welfare reforms The Liberal welfare reforms (1906–1914) were a series of acts of social legislation passed by the Liberal Party (UK), Liberal Party after the 1906 United Kingdom general election, 1906 general election. They represent the emergence of the moder ...
.
Income tax An income tax is a tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law Law is a system A system is a group of Interaction, interacting or interrelate ...
was held at nine
pence A penny is a coin A coin is a small, flat, (usually, depending on the country or value) round piece of metal A metal (from Greek Greek may refer to: Greece Anything of, from, or related to Greece Greece ( el, Ελλάδα, , ...
in the
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(9d, or 3.75%) on incomes less than £2,000, which was equivalent to roughly £225,000 in today's money—but a higher rate of one
shilling The shilling is a historical coin, and the name of a unit of modern currencies A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-D ...
(12d, or 5%) was proposed on incomes greater than £2,000, and an additional surcharge or supertax of 6d (a further 2.5%) was proposed on the amount by which incomes of £5,000, or more (approximately £566,000 today) exceeded £3,000 (£340,000 today approx.). An increase was also proposed in
death duties An inheritance tax is a tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law, a legal person is any person A person (plural people or persons) is a being that h ...
and naval rearmament. More controversially, the Budget also included a proposal for the introduction of complete land valuation and a 20% tax on increases in value when land changed hands.Magnus 1964, p. 527
Land tax A land value tax (LVT) is a levy on the value of land Land is the solid surface of Earth that is not permanently submerged in water. Most but not all land is situated at elevations above sea level (variable over geologic time frames) and c ...
es were based on the ideas of the American tax reformer
Henry George Henry George (September 2, 1839 – October 29, 1897) was an American political economist Political economy is the study of Production (economics), production and trade and their relations with law, Custom (law), custom and government; and ...

Henry George
. This would have had a major effect on large landowners, and the Conservative-Unionist opposition, many of whom were large landowners, had had an overwhelming majority in the Lords since the Liberal split in 1886. Furthermore, the Conservatives believed that money should be raised through the introduction of
tariff A tariff is a tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law Law is a system A system is a group of Interaction, interacting or interrelated el ...
s on
imports An import is the receiving country in an export An export in international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of go ...
, which would benefit British industry and trade within the Empire, and raise revenue for social reforms at the same time; but this was also unpopular as it would have meant higher prices on imported food. According to economic theory, such tariffs would have been very beneficial for landowners, especially tariffs on agricultural produce, but the costs to ordinary consumers would have exceeded the gains to these landowners (see
Corn Laws The Corn Laws were tariff A tariff is a tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law Law is a system A system is a group of Interaction, ...
).


Constitutional stand-off

The
Northcliffe Press
Northcliffe Press
(who published both ''
The Times ''The Times'' is a British Newspaper#Daily, daily Newspaper#National, national newspaper based in London. It began in 1785 under the title ''The Daily Universal Register'', adopting its current name on 1 January 1788. ''The Times'' and its s ...
'' and the ''
Daily Mail The ''Daily Mail'' is a British daily Middle-market newspaper, middle-market newspaper and online newspaper, news websitePeter Wilb"Paul Dacre of the Daily Mail: The man who hates liberal Britain", ''New Statesman'', 19 December 2013 (online ...
'') urged rejection of the budget to give tariff reform a chance. There were many public meetings, some of them organised by dukes, which portrayed the budget as the thin end of the socialist wedge. Lloyd George gave a speech at
Newcastle upon Tyne Newcastle upon Tyne ( , ), often simply Newcastle, is the largest city A city is a large .Goodall, B. (1987) ''The Penguin Dictionary of Human Geography''. London: Penguin.Kuper, A. and Kuper, J., eds (1996) ''The Social Science Encyclopedi ...

Newcastle upon Tyne
in October 1909 in which he said that "a fully-equipped duke costs as much to keep up as two
Dreadnought The dreadnought (also spelled dreadnaught) was the predominant type of battleship A battleship is a large armour, armored warship with a main artillery battery, battery consisting of large caliber guns. During the late 19th and early 20t ...
s; and dukes are just as great a terror and they last longer". The Conservatives wanted to force an election by rejecting the budget. The Lords were entitled by convention to reject but not to amend a money bill but had not rejected a budget for two centuries. Originally, the budget had included only annual renewals of existing taxes—any amendment to taxes was part of a separate Act. That ended in 1861 (
William Ewart Gladstone William Ewart Gladstone (; 29 December 1809 – 19 May 1898) was a British statesman and Liberal Liberal or liberalism may refer to: Politics *a supporter of liberalism, a political and moral philosophy **Liberalism by country *an ...

William Ewart Gladstone
was Chancellor at the time) when the Lords rejected the repeal of paper duties, which would have benefited new cheaper newspapers aimed at men who hoped soon to be given the right to vote, at the expense of existing papers. From then on, all taxes were included in the Finance Bill, and no such bill had been rejected, including the controversial introduction of death duties by
Sir William Harcourt Sir William George Granville Venables Vernon Harcourt (14 October 1827 – 1 October 1904) was a British lawyer, journalist and Liberal Party (UK), Liberal statesman. He served as Member of Parliament for Oxford, Derby then West Monmouthshire an ...
in 1894. Despite the King's private urgings for the budget to be passed to avoid a crisis, the House of Lords vetoed the new budget on 30 November 1909 although it clarified that it would pass the bill as soon as the Liberals obtained an electoral mandate for it. The Liberals countered by proposing to reduce the power of the Lords. That was the main issue of the general election in January 1910, setting the stage for a tremendous showdown, which Lloyd George and Churchill relished. Despite the heated rhetoric, opinion in the country was divided. The Unionists, with 47% of the votes, were outpolled by the Liberals and their allies from the Labour Party. The outcome was a
hung parliament A hung parliament is a term used in legislatures under the Westminster system to describe a situation in which no particular political party or pre-existing coalition (also known as an alliance or bloc) has an absolute majority of legislators (c ...
, with the Liberals relying on Labour and the
Irish Parliamentary Party The Irish Parliamentary Party (IPP; commonly called the Irish Party or the Home Rule Party) was formed in 1874 by Isaac Butt Isaac Butt (6 September 1813 – 5 May 1879) was an Irish barrister A barrister is a type of lawyer in commo ...
for their parliamentary majority. As the price for their continued support, the Irish nationalist MPs demanded measures to remove the Lords' veto so that they could no longer block Irish Home Rule. They even threatened to vote down the Budget in the House of Commons (Irish Nationalists favoured tariff reform and abhorred the planned increase in whisky duty) until Asquith pledged to introduce such measures. As they had promised, the Lords accepted the Budget on 29 April 1910, a year to the day after its introduction, but contention between the government and the Lords continued until the second general election in
December 1910 The following events occurred in December 1910: December 1 Events * 800 – Charlemagne Charlemagne (; ) or Charles the Great or ''Carolus'', whence in English or in German (for this individual, specifically ''Karl der Gro ...
, when the Unionists were again outpolled by their combined opponents. The result was another hung parliament, with the Liberals again relying on Labour and the Irish Parliamentary Party. Nonetheless, the Lords passed the
Parliament Act 1911 The Parliament Act 1911 (1 & 2 Geo. 5 c. 13) is an Act of the Parliament of the United Kingdom The Parliament of the United Kingdom is the of the , the and the . It alone possesses and thereby ultimate power over all other politica ...

Parliament Act 1911
when faced with the threat, obtained from a narrowly-convinced new King (
George V George V (George Frederick Ernest Albert; 3 June 1865 – 20 January 1936) was King of the United Kingdom and the British Dominions, and Emperor of India, from 6 May 1910 until his death in 1936. Born during the reign of his grandmother ...

George V
, Edward VII having died on 6 May 1910, seven days after the Budget was passed), that it would be acceptable to flood the House of Lords with hundreds of new Liberal Party peers to give that party a majority or a near-majority there.


See also

* Budget League *
Budget Protest League The Budget Protest League was a British pressure group formed in June 1909 and led by Walter Hume Long, 1st Viscount Long, Walter Long to oppose David Lloyd George's "People's Budget" outside of Parliament of the United Kingdom, Parliament. The Lea ...
*
Welfare state in the United Kingdom The welfare state of the United Kingdom began to evolve in the 1900s and early 1910s, and comprises expenditures by the government of the United Kingdom intended to improve health, education, employment and social security. The British system ...


References


Bibliography

* Cross, Colin. ''The Liberals in Power, 1905–1914'' (1963) pp. 101–111
online
* Gilbert, Bentley Brinkerhoff. "David Lloyd George: Land, The Budget, and Social Reform." ''American Historical Review'' 81.5 (1976): 1058–1066. * Lee, Geoffrey. ''The People's Budget: An Edwardian Tragedy'' (Shepheard-Walwyn, 2008). * * Murray, Bruce K. "The Politics of the ‘People's Budget’." ''Historical journal'' 16#3 (1973): 555–57
online
* * Murray, Bruce K. "The Unionist Leaders and the rejection of the ‘People's Budget’, 1909." ''South African Historical Journal'' 8.1 (1976): 84–103. * Watson, Steven. "The Budget and the Lords: the Crisis of 1909–11." ''History Today'' (1953) 3#4 pp. 240–248
online


External links

* From
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indexes: *
"Finance Bill"
(references dated 1909-04-29 to 1911-03-02 are to the People's Budget) ** "Budget Resolution
19091910

The People's Budget and the Welfare State
David Lloyd George Exhibition, National Library of Wales {{United Kingdom budget 1909 in economics 1910 government budgets 1909 in British politics 1910 in economics Constitutional crises Land taxation Political history of the United Kingdom United Kingdom budgets Welfare state in the United Kingdom Income tax in the United Kingdom History of taxation in the United Kingdom Peoples Budget