by Roy Jenkins
The Licensing Bill, a somewhat delayed riposte to Balfour’s Act of 1904, received its second reading in the Commons at the end of April. Its object was a compulsory reduction in the number of public-houses, so that they should not in any area exceed a fixed ratio to the population.1 The money for compensation was to be raised by a levy on the liquor trade, but payments to the holders of extinguished licences were to cease at the end of fourteen years. The measure was denounced by the Unionists as confiscatory and vindictive.2 Arthur Balfour is recorded by his biographer as being ‘furious about it’, and as holding the belief that its effects were ‘against every interest of public decency and morality’.t The Bill was opposed most bitterly at every stage of its passage through the Commons and did not secure its third reading until November 20.
In view of the experience with other bills, there was naturally a widespread expectation that the Lords would not allow the measure to pass. Indeed, as Lord Newton has recorded without comment, the brewers had already threatened to withdraw their support from the Unionist Party if this did not happen.u The King, with the approval of the Prime Minister, had also attempted to exercise influence—but in the other direction, and less effectively. He had summoned Lansdowne to see him on October 12, and had told him of his fear that ‘if the attitude of the Peers was such as to suggest that they were obstructing an attempt to deal with the evils of intemperance, the House of Lords would suffer seriously in popularity’. He assured Lansdowne that the Government was likely to accept an extension of the time limit to twenty or twenty-one years, and urged him to secure for the bill a second reading and to amend it, if necessary, in committee.
Lansdowne told the King that he had not discussed the matter since the summer ‘either with the front bench peers or with Mr. Balfour and those who act with him in the House of Commons’, and added that it was impossible for him to decide what advice he would give to the Unionist peers until he had seen how ‘the Bill fared in the House of Commons’. He agreed however (it would have been a little shameless for him to have done otherwise) that ‘it was not desirable that the peers and the brewers should be represented (my italics) as in too close alliance’.v For the rest, he warned the King that he saw danger in accepting the principle of the bill, and spoke of the ‘bitter experience’ which the peers had undergone with the Old Age Pensions Bill.
This last measure, providing for non-contributory pensions at the age of seventy, which had been taken earlier in the session, had not been warmly received in the Upper House. One peer had talked of it as ‘so prodigal of expenditure as likely to undermine the whole fabric of the Empire’, and another had regarded it as ‘destructive of all thrift’. But the policy of amending it in committee rather than of rejecting it on second reading had been adopted. The resultant amendments, however, had been treated by the Commons as inadmissible, because the measure was a money bill. Under protest, the Lords had accepted this, but they adopted the incident as an excuse for a more intransigent attitude on licensing.
This intransigence was decided upon at a meeting of Unionist peers held in Lansdowne House on November 24. Here a small but distinguished body of peers was opposed to rejection. They numbered about ten, and included St. Aldwyn, Cromer,1 Milner,2 Balfour of Burleigh3 and Lytton.4 Their motives were varied, but Milner, for example, was in favour of moderation both because he believed the bill to possess intrinsic merits and because he thought its rejection by the Lords would stem the Unionist tide which he saw flowing very strongly in the country. But the majority were probably more afraid of checking the brewers than of stemming the tide, and thought that in any event a clash between the two Houses had become inevitable, and that there was little point in attempting to postpone it.
Their policy was adopted. After a three-day debate, the House of Lords declined, on November 27, to give the bill a second reading by a vote of 272 to 96. It was a big attendance of peers, and Lord Fitzmaurice,5 for the Government, remarked that the Upper House was at least giving the bill ‘a first-class funeral. A great number of noble Lords have arrived who have not often honoured us with their presence.’ Yet a third Education Bill had also perished at the hands of the Lords during the year.
In this way the third session of the 1906 Parliament came to an end. As in the two previous sessions, no measure, other than a money bill, had passed on to the statute book in anything like its original form unless, on third reading in the Commons, it had secured the acquiescence of Arthur Balfour. For three years the smallest Opposition within living memory had effectively decided what could, and what could not, be passed through Parliament. In the language of the day, the cup was full, and the sands were exhaustively ploughed.
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 Unionist 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 Hous
e 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
But why, if Lloyd George’s desire was to produce a peer-rousing Finance Bill, should Lansdowne’s statements on the Old Age Pensions Bill have stimulated him to action? Surely the Unionist leader’s reiteration of the principle of the Commons’ exclusive control of finance should have made him sceptical of the possibility of this outcome. The argument only makes sense if his primary object was to circumvent the veto rather than to destroy it.
Nor does the speech which the Chancellor of the Exchequer delivered to the Law Society on January 30, on the occasion of the presentation of a portrait of himself, bear out his biographer’s theory. In July of the previous year he had threateningly announced: ‘Next year I shall have to rob somebody’s hen-roost, and I must consider where I can get most eggs, and where I can get them easiest, and where I shall be least punished.’ But at the Law Society he went out of his way to undo the effects of this statement. He referred to this ‘bad jest’ on the subject of hen-roosts, and, in the words of the Annual Register, ‘emphatically disclaimed any vindictive spirit in his financial plans. The single purpose of the Chancellor of the Exchequer (he said) should be the protection and confirmation of the national interests; and in that spirit he approached his task.’c Vague conciliatory statements, delivered in this way, do not perhaps mean very much, but there is no conceivable reason why a Minister intent on stirring up the maximum of opposition should trouble to make them at all. This was not an isolated case. Lloyd George continued to be suaviter in modo until well into the summer.
The view that Asquith was from the first a party to the Chancellor’s supposed tactic of shaping a Budget for the peers to reject is still less convincing. Such a device would have been alien to his character, and in direct contradiction to his clearly expressed belief, repeated at many stages in the controversy, that the House of Lords would never dare to throw out a Finance Bill. In the debate on the Address at the beginning of the 1909 session he was confronted with a direct challenge to the Government’s inactivity on the House of Lords issue in the form of an amendment, moved by Campbell-Banner-man’s successor1 in the Stirling Burghs, which called for legislation in the current session to implement the 1907 resolution. This was pressed to a division2 and gave serious embarrassment to the Government. But Asquith in his reply, while he stressed (as had been done in the King’s Speech) the heavy calls upon the time of the session which the Finance Bill would make, gave no shadow of a hint that it might also precipitate constitutional action.
This approach was characteristic of the Prime Minister’s public utterances at the time. At Glasgow, where only a fortnight before the introduction of the Budget he spoke of ‘unprecedented financial strains’, he was at pains to prepare the country for a controversial Budget and concentrate attention on financial issues. But there is every indication that he, and the Government, regarded the Budget as an alternative to the struggle with the House of Lords rather than as a method of prosecuting this struggle.
Lloyd George therefore proceeded with the framing of his proposals in the knowledge that the stage had been cleared for their reception. It has been suggested that he had grave difficulty in securing Cabinet approval for his more controversial imposts. To quote Mr. Thomson again:
‘He (Lloyd George) said that by far the most difficult fight he had was in the Cabinet, not in the country. Harcourt was the most inveterate in obstructing his proposals, while posing all the time as an ardent Radical. Crewe, while not liking them, said very little. Grey said nothing. But at heart they were all against him. Sir Robert Chalmers, then the head of the Treasury, walked up to the door of the Cabinet room with L.G. one day when he was going to a meeting to discuss his Budget proposals, and when L.G. had gone in Chalmers turned to the man at his side and said, “That little man goes into the fight absolutely alone.” When L.G. came out, Chalmers said to him apprehensively, “Well? …” “Oh, I carried them all right,” was L.G.’s cheerful reply.’d
This story, even if vero, is certainly not ben trovato. Even under Lloyd George’s regime, it can hardly have been the practice for the Permanent Secretary of the Treasury to wait outside the door of the Cabinet Room in 10 Downing Street, presumably chatting to the messengers, throughout the length of Cabinet meetings.
‘Asquith alone was helpful when it came to a vote,’ Mr. Thomson continues, ‘although he never supported the proposals actively. Once, when nearly everyone around the table had raised objections to a certain proposal, Asquith summed up with the words, “Well, I think there is substantial agreement on this point.” ’It appears from the example cited that the Prime Minister was more helpful in avoiding a vote than ‘when it came to’ one, and indeed, if Mr. Thomson’s account of Cabinet divisions is true, Lloyd George’s own proposals would hardly have seen the light of day had continual votes been the method of procedure.
Asquith himself has since expressed a certain lukewarmness towards some of the more controversial of the Budget proposals.
‘Being supposed myself to be a financier of a respectable and more or less conservative type,’ he wrote in 1926, ‘I was, in the course of the debates, frequently challenged by Mr. Balfour and others to defend the new imposts, and especially the Undeveloped Land and the Increment Duties. I have undertaken in my time many more intractable dialectical tasks, and though I was fully alive to the mechanical difficulties involved, and perhaps not so sanguine as some of my colleagues as to the progressive productiveness of the taxes, I had never any doubt as to their equity in principle.’e
But by the time these words were written a Government presided over by Lloyd George himself had long since repealed the taxes in question. It may therefore be thought that they constitute no irrefutable proof of the half-heartedness of the head of the Government, as against the full-blooded enthusiasm of his Chancellor, in 1909. And the Prime Minister was probably much more prepared for financial adventure (for which, over a period of three months, he had sedulously been preparing Parliament and the country) in the heat of the day than he was anxious to admit in the cool aftermath of the ’twenties.
Grey, once described by Arthur Balfour as ‘a curious combination of the old-fashioned Whig and the Socialist’, indicated by his subsequent statements that he might have reacted somewhat equivocally to the Budget proposals. If his ‘socialism’ impelled him to welcome them, and his ‘whiggery’ to abhor them, he resolved the conflict by saying that he approved of the proposals themselves but disliked the way in which they were advocated. When a correspondent wrote to him abusing the Chancellor of the Exchequer, he replied sternly: ‘I cannot agree with what you say.
Mr. Lloyd George is a colleague with whom I have always been on the best of terms personally, and the Budget raises the money required in a way which presses much less, I believe, upon the poorer classes than any alternative that could be devised.’f And in June he went out of his way, at a dinner given in his honour by the National Liberal Club, to reply to statements made by his old Chief, Rosebery, and to defend the Budget. It ‘was good’, he said, ‘by whatever general principle it was tried; it took taxes from superfluities, and taxed people in proportion to their ability to pay’.g But in private conversation he expressed the view that the Chancellor’s speeches were unfair, and later in the year he wrote to Mrs. Asquith: ‘I am no optimist: X— (whose identity is not difficult to guess) has made too much running, I fear, to carry the electors with us: in this country they move slowly and distrust rhetoric.’h All this was no doubt compatible with a somewhat uneasy acquiescence in Cabinet, although not, it may be thought, with any definite opposition.
