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, such as non-contributary old age pensions under
Old Age Pensions Act 1908. It passed the
House of Commons
The House of Commons is the name for the elected lower house of the Bicameralism, bicameral parliaments of the United Kingdom and Canada. In both of these countries, the Commons holds much more legislative power than the nominally upper house of ...
in 1909 but was blocked by the
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the lower house, the House of Commons of the United Kingdom, House of Commons, it meets in the Palace of Westminster in London, England. One of the oldest ext ...
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 chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and the head of HM Treasury, His Majesty's Treasury. As one of the four Great Offices of State, t ...
,
David Lloyd George
David Lloyd George, 1st Earl Lloyd-George of Dwyfor (17 January 1863 – 26 March 1945) was Prime Minister of the United Kingdom from 1916 to 1922. A Liberal Party (United Kingdom), Liberal Party politician from Wales, he was known for leadi ...
, and his young ally
Winston Churchill
Sir Winston Leonard Spencer Churchill (30 November 1874 – 24 January 1965) was a British statesman, military officer, and writer who was Prime Minister of the United Kingdom from 1940 to 1945 (Winston Churchill in the Second World War, ...
, who was then
President of the Board of Trade
The president of the Board of Trade is head of the Board of Trade. A committee of the His Majesty's Most Honourable Privy Council, Privy Council of the United Kingdom, it was first established as a temporary committee of inquiry in the 17th centur ...
and a fellow
Liberal; called the "Terrible Twins" by certain
Conservative
Conservatism is a cultural, social, and political philosophy and ideology that seeks to promote and preserve traditional institutions, customs, and values. The central tenets of conservatism may vary in relation to the culture and civiliza ...
contemporaries.
William Manchester, 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 an electoral process to choose most or all members of a governing body at the same time. They are distinct from By-election, by-elections, which fill individual seats that have become vacant between general elections. Gener ...
s in 1910 and the enactment of the
Parliament Act 1911.
Overview
The Budget was introduced in the
British Parliament
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body of the United Kingdom, and may also legislate for the Crown Dependencies and the British Overseas Territories. It meets at the Palace of ...
by
David Lloyd George
David Lloyd George, 1st Earl Lloyd-George of Dwyfor (17 January 1863 – 26 March 1945) was Prime Minister of the United Kingdom from 1916 to 1922. A Liberal Party (United Kingdom), Liberal Party politician from Wales, he was known for leadi ...
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.
Income tax
An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
was held at nine
pence in the
pound (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 currency, currencies formerly used in the United Kingdom, Australia, New Zealand, other British Commonwealth countries and Ireland, where they were generally equivalent to 1 ...
(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 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 taxes 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, Social philosophy, social philosopher and journalist. His writing was immensely popular in 19th-century America and sparked several reform movements of ...
. 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 or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...
s on
imports
An importer is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade. Import is part of the International Trade which involves buying and receivin ...
, 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 budget was widely supported by Liberals. As one observer noted
Constitutional stand-off
The
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 modern name on 1 January 1788. ''The Times'' and its si ...
'' and the ''
Daily Mail
The ''Daily Mail'' is a British daily Middle-market newspaper, middle-market Tabloid journalism, tabloid conservative newspaper founded in 1896 and published in London. , it has the List of newspapers in the United Kingdom by circulation, h ...
'') 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, or simply Newcastle ( , Received Pronunciation, RP: ), is a City status in the United Kingdom, cathedral city and metropolitan borough in Tyne and Wear, England. It is England's northernmost metropolitan borough, located o ...
in October 1909 in which he said that "a fully-equipped duke costs as much to keep up as two
Dreadnought
The dreadnought was the predominant type of battleship in the early 20th century. The first of the kind, the Royal Navy's , had such an effect when launched in 1906 that similar battleships built after her were referred to as "dreadnoughts", ...
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 1860 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 in 1894.
Despite
Edward VII
Edward VII (Albert Edward; 9 November 1841 – 6 May 1910) was King of the United Kingdom and the British Dominions, and Emperor of India, from 22 January 1901 until Death and state funeral of Edward VII, his death in 1910.
The second child ...
'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 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 primarily under the Westminster system (typically employing Majoritarian representation, majoritarian electoral systems) to describe a situation in which no single political party or pre-existing ...
, with the Liberals relying on
Labour and the
Irish Parliamentary Party 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 28 April 1910, but contention between the government and the Lords continued until the second general election in
December 1910, 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 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 Death and state funeral of George V, his death in 1936.
George w ...
(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.
[Bradley & Ewing 2007, p. 204]
See also
*
Budget League
*
Budget Protest League
*
The Land (song)
*
Welfare state in the United Kingdom
Citations
General and cited references
* Blewett, Neal. ''The peers, the parties and the people : the British general elections of 1910'' (1972
online*
*
* Daunton, Martin. ''Trusting Leviathan: The Politics of Taxation in Britain 1799–1914'' (Cambridge University Press, 2001), chapter 1
online
* Gilbert, Bentley Brinkerhoff. "David Lloyd George: Land, The Budget, and Social Reform". ''American Historical Review'' 81.5 (1976): 1058–1066
online* Gilbert, Bentley Brinkerhoff. ''David Lloyd George A Political Life: The Architect of Change 1863–1912'' (Ohio State University Press, 1987), pp 361-398
* Grigg, John. ''Lloyd George, the people's champion, 1902-1911'' (1978). pp.170–291
online
* Jenkins, Roy. ''Mr. Balfour's poodle: an account of the struggle between the House of Lords and the government of Mr. Asquith.'' (1968
online* Lee, Geoffrey. ''The People's Budget: An Edwardian Tragedy'' (Shepheard-Walwyn, 2008).
*
* Morgan, Kenneth O. "‘Rare and refreshing fruit’: Lloyd George's People's Budget." ''Public Policy Research'' 16.1 (2009). https://doi.org/10.1111/j.1744-540X.2009.00551.x
* Murray, Bruce K. ''The People's Budget , 1909-10: Lloyd George and Liberal Politics'' (Oxford University Press. 1980).
** Murray, Bruce K. "The Politics of the 'People's Budget'." ''Historical journal'' 16#3 (1973): 555–570. . als
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 ''
Hansard
''Hansard'' is the transcripts of parliamentary debates in Britain and many Commonwealth of Nations, Commonwealth countries. It is named after Thomas Curson Hansard (1776–1833), a London printer and publisher, who was the first official printe ...
'' indexes:
*
"Finance Bill"(references dated 1909-04-29 to 1911-03-02 are to the People's Budget)
** "Budget Resolution
19091910The People's Budget and the Welfare StateDavid Lloyd George Exhibition, National Library of Wales
Graham Jones and David Lloyd George. "Lloyd George on the People’s Budget" {{United Kingdom budget
1909 in British politics
1909 in economic history
1910s government budgets
Peoples Budget
1910 in economic history
Constitutional crises
History of taxation in the United Kingdom
Income tax in the United Kingdom
Land taxation
Political history of the United Kingdom
United Kingdom budgets
Welfare in the United Kingdom
David Lloyd George
Winston Churchill