The People’s Budget and Constitutional Crisis

The People’s Budget and Constitutional Crisis

The Liberal Reforms were going to cost around £16 million and this number had to be raised in the budget of 1909. The Liberals introduced a budget with a number of new taxes. Quite simply, Lloyd-George taxed the rich and better off in order to fund help for the needy and more vulnerable in society.

Some features of his 1909 'People Budget' were:

·         Super tax - 6 pence per pound on incomes of £5,000 and over

·         Income tax increased by 2 pence in the pound on unearned incomes and on incomes over £3,000 per annum

·         Increase in death duties an estates worth more than £5,000

·         Tax on motor vehicles

·         New land taxes

·         Increased duties on liquor licences

·         Duties on spirits raised by a third, those on tobacco by a quarter

This budget was controversial because it marked a clear departure in terms of approach to taxation. Taxes were deliberately raised in order to pay for state-run schemes and there was for the first time an element of redistribution of wealth. Since the Budget was particularly targeted against those on high incomes it was strongly opposed by the Conservative Party.

The budget easily passed through the House of Commons. However, it was rejected by the Conservative dominated House of Lords. This lead to an enormous political and constitutional crisis. Traditionally the House of Lords never opposed a finance measure. The unelected Lords were seen to be defying the will of the elected Commons. The government had been denied the money it needed to govern as it thought fit. The real issue therefore became one of who governed Britain, the unelected Lords of the House of Commons. Asquith had no choice but to ask for the King to dissolve parliament and call a general election.

Some historians argued that Lloyd-George engineered the conflict with the Lords. He hated privilege of any kind, and landed privilege most of all. It was clear that he would relish a conflict with the Lords, but did he deliberately provoke one in the expectation that a constitutional crisis would break out? It seems unlikely for two reasons:

·         Both Asquith and Lloyd-George gave priority to the Liberal reform programme, any constitutional conflict would delay reforming legislation

·         By 1909, some Liberals were beginning to become disillusioned by what they perceived as the limited nature of the reforms. Lloyd George and Asquith were looking for a way to kick-starting the reform programme and a massive injection of cash was necessary for this. The last thing they would have wanted was a constitutional struggle 

Constitutionally, the Lords had done nothing wrong. All bills…