First Constitutional Crisis

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  • Created on: 08-05-13 19:32
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  • The First Constitutional Crisis: the People's Budget 1909-1910
    • Lloyd George, needed to find £15 million of extra revenue to provide for the new social services + the construction of naval warships, set to tax the rich.
    • Budget of 1909 proposed:
      • increased incomes tax from one shilling to one shilling and two pence in the pound incomes over £3,000 a year
      • a new super tax on incomes over £5,000 a year
      • Increased death duties on estates of over £5,000
      • new land taxes
        • especially controversial and wouldn't produce a great deal of tax revenue, but inflamed Conservative landowners.
        • A Budget Protest League was set up and denounced the taxes as confiscation and robbery.
          • In his Limehouse speech of July 1909, Lloyd George spoke of the opposition to his propsals being a 'class war'
      • indirect taxes on luxury goods such as motor cars, petrol, beer and tobacco
    • Lloyd George needed to increase revenue and he favoured the redistribution of the rich to the poor, but probably had other reasons for launching the budget
      • he wanted to show working class voters that they didn't need to vote Labour to get radical measures
      • he wanted to punish the Conservatives for their opposition in the Lords
    • Conservatives said the budget amounted social revolution
      • Opponents were worried about the idea of redistributive taxation and progressive taxation, and feared that once these principles were established they could be extended to 'soak the rich'
        • November 1909 the Lords rejected the budget.
          • the convention that the Lords should not interfere with money bills was broken and the Liberal government was left with no legal authority to collect taxes. They had no choice but to call a general election in January 1910.
    • General election 1910


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