Mr Balfour's Poodle

by Roy Jenkins

  Haldane, the third member of the Liberal League triumvirate, was not very well disposed towards Lloyd George at this (or any other) time. A remark of his on Budget Day is quoted by Austen Chamberlain’s biographer: ‘“It seems to me,” remarked Austen’s friend, Leverton Harris,1 speaking of the Chancellor of the Exchequer to Mr. Haldane in the smoke-room of the House of Commons that night, “that he read that speech like a man who does not understand what he is reading.” “Of course he doesn’t,” replied the other. “Why, we have been trying for weeks to make him understand clauses of the Bill, and he can’t.”’i

  This malicious story,2 while it certainly shows that Haldane had no desire to enhance the Chancellor’s reputation, is quite incompatible with the theory that the Budget proposals, believed in only by Lloyd George himself, were forced down the throats of a reluctant Cabinet.3

  The ultimate test, however, of whether or not Lloyd George had to face and overcome the united opposition of the rest of the Cabinet lies less in any attempt to reconstruct from their subsequent statements and writings the attitude of various Ministers at the time than in the hard facts of the support which they gave to the Chancellor throughout the long struggle to put the Budget through. If the other members of the Government were as hostile to the Budget as some would have us believe, their loyalty in the ensuing months, both to Lloyd George himself and to the measures which they disliked, was one of the most remarkable things in the history of British politics. Asquith himself, in the Chancellor’s own words, ‘was firm as a rock’. For the rest, there were no deliberate indiscretions, no attempts by Ministers to let it be widely known that they stood a little above the conflict, and no resignations. In the House of Commons too, while there was a little cross-voting on individual points, the Liberal back-benchers supported the Government in the key divisions with great solidarity. Mrs. Asquith recorded after the third reading that ‘the remarkable thing about the passing of this Budget was the unanimity with which people of different views backed it. Even the men who act according to their humour … voted for the Bill.’j The shedding of its right wing had for so long been a habit with the Liberal Party that it would indeed be remarkable, even without the suggestion of a reluctant Cabinet, that so controversial a measure as Lloyd George’s first Budget should have produced not a single defection of note.

  What were the proposals which this famous Budget contained? Today they inevitably seem unexciting, as do the sums of money involved, for financial issues survive the passage of time even less well than do most other subjects of political controversy. The Chancellor wanted £164m., against the £151m. which he had received in the preceding year, and the £148m. which he calculated existing taxes would give him in the year that was then beginning.1 This left him with a prospective deficit of £16m., and as the increased expenditure on battleships and social services was likely to be cumulative, it was important that he should close this gap by taxes of which the yield would increase as time went on.

  His first proposal was for a reduction of £3m. in the sinking fund payment. Death duties, and the associated legacy, succession and settled estate duties, were to bring in another £4m. in the current year, and another £6½m. in subsequent years. This involved increases in scale to the extent of making estates of £1m. and over liable to a total duty of approximately 25%. The income tax was adjusted to yield another £3m. The rate of tax on the former remained at IS. (9d. under £2,000); on the latter it was increased to IS. 2d. A £10 children’s allowance, to apply only to incomes under £500, was another innovation. A much more important one, however, was the introduction of the super-tax. This was to be charged, at a rate of 6d. in the £, on the amount by which all incomes of £5,000 or more exceeded £3,000. It was to bring in £500,000 in the current year and £2,300,000 in the following year. Of all the Chancellor’s proposals, this was much the most pregnant with social change; but this was not appreciated at the time, and it was not the proposal which aroused the most controversy.

  This distinction was reserved for the land taxes. There were three of these. The first provided for a tax of 20% on the unearned increment in land values, which was to be paid either when the land was sold or when it passed at death. The second provided for a capital tax of ½d. in the £ on the value of undeveloped land and minerals;1 and the third for a 10% reversion duty on any benefit which came to a lessor at the end of a lease. These taxes were to bring in only £500,000 in the current year, but their yield was expected to increase considerably in subsequent years.

  The next important group of new taxes related to alcohol and tobacco. The licence duties were to be increased so as to bring in another £2,600,000. Spirits were to pay another 3s. 9d. a gallon, which would have the effect of increasing the price of whisky by ½d. a glass, and the tobacco duty was raised by 8d. a pound. The combined yield of these two taxes was to be £3½m. in the current year.

  The taxation of the road-user became for the first time of moderate importance. For motor-car licences a graduated scale, varying from two to forty guineas according to horsepower, was introduced. Motor bicycles were to pay a flat rate of £1. In addition, a tax of 3d. a gallon was imposed on petrol, but there was to be a rebate for taxicabs and buses. The yield of this group of taxes was put at £750,000, but this sum was to be paid into a Road Fund and not used to meet general expenditure. In the same way the proceeds of a mineral rights duty of a shilling in the £ on mining royalties and wayleaves were to be used to finance a Miners’ Welfare Fund.

  These, with a few other miscellaneous changes, were the provisions of the ‘People’s Budget’. Lloyd George introduced them to the House of Commons on April 29, and despite the fact that he had lightened his task by the innovation of circulating beforehand a printed statement of the financial results of the past year, he took four and a half hours to do it. As a speech, it excited mixed comment. ‘(The Chancellor) was fagged before he began,’ Austen Chamberlain wrote to his stepmother. ‘Halfway through he was dead-beat, and had to ask for a half-hour adjournment. He recovered somewhat after this, but much of the speech was read, and badly read. He stumbled over the sentences, rushed past the full stops, paused at the commas, and altogether gave the impression that at these points he did not himself understand what he was saying.’k But Austen, more than most men, had the gift of believing that the speeches of his opponents were as bad as those of his friends were good. The half-hour adjournment had been very willingly granted by the House. According to The Times, it was suggested by the leader of the Opposition, who leant across the table to speak to the Prime Minister, and was taken up with sympathetic shouts of ‘Half an hour’ and ‘Give him an hour.’ And the same newspaper wrote of the speech as a whole as ‘a wonderful effort’.

  So far as the substance of the proposals was concerned, they were favoured with a greater weight of pejorative comment than has been the lot of any other Budget, either before or since. Arthur Balfour denounced it as ‘vindictive, inequitable, based on no principle, and injurious to the productive capacity of the country’. It ‘means the beginning of the end of all rights of property’, said Sir Edward Carson. ‘It is a monument of reckless and improvident finance,’ said Lord Lansdowne. ‘It is inquisitorial, tyrannical and Socialistic,’ said Lord Rosebery.

  In these and many other ways the Budget was strongly denounced by all the opponents and by some of the erstwhile supporters of the Government. But the denunciation did not begin as soon as the Chancellor had announced his proposals. His four-and-a-half-hour speech had enabled him to elaborate them in some detail, and his peroration, in which he spoke of a ‘war Budget—for raising money to wage implacable warfare against poverty and squalidness’, gave a clear indication of what he was about. But the Opposition were at first more bemused than exasperated. It was then customary, as it is not now, to carry on a full-scale debate immediately after the Chancellor’s speech and to divide on certain of the Budget Resolutions at the end of the day. Austen Chamberlain therefore followed Lloyd George, and although, i
n his own words he ‘only skimmed the surface of (the) proposals’, he took over an hour to do so. But there was no hint in his speech of resistance â outrance. One of his main points was to suggest that the Liberal Party might now have a better understanding of the reasons why the previous Administration had not reduced expenditure. The Times, on the following day, apprehended that ‘the huge deficit … is to be raised almost exclusively at the cost of the wealthy and the fairly well-to-do’, but it accompanied this by the strange statement that it was an un-adventurous Budget in the sense that it broke no fresh taxation ground.

  This was very much the lull before the storm. By May I, The Times was very worried, not so much by the detailed proposals of the Budget as by its political implications. ‘The Chancellor of the Exchequer,’ it noted somewhat turgidly, ‘discussed various matters not relevant to the matter in hand, deliberately with the intention of raising questions the discussion of which might lead to controversies likely, in his judgment, to be useful to his Party in the future.’ In the debate on the general principles of the Budget which arose out of the Tea Resolution on May 3, 4, and 5, Balfour was strangely mild in his condemnation,1 but this hesitancy had disappeared by the time of his Albert Hall speech to the Primrose League on May 7. Thereafter the campaign against the Budget rapidly gained momentum. City opinion quickly mobilised itself, and the leading financial houses sent a letter to the Prime Minister on May 15, which was phrased in familiar terms.

  ‘… while prepared to bear their full share of increased taxation, which they recognised as necessary, (they) expressed alarm at the increasing disproportion of the burden placed on a small class. They held that the increase of the death duties … and of the income tax coupled with the super-tax, would injure commerce and industry; that the prosperity of all classes had been greatly due to the indisputable safety for capital afforded by Great Britain, and that the taxes in question would discourage private enterprise and thrift, thus eventually diminishing employment and reducing wages.’l

  A few weeks later the Budget Protest League was formed, under the presidency of Walter Long,1 and the Unionist Party committed itself at all points to the most resolute resistance to the Chancellor’s proposals.

  In the Liberal camp the Budget was on the whole enthusiastically received. Some of the old Whigs were unhappy about the land taxes, and at a later stage thirty of them formed themselves into a deputation to the Prime Minister on these points. But they never carried their doubts to the extent of provoking a serious split in the party. On the majority of Liberal members the effect was quite the reverse. They approved of the detailed proposals, but even more strongly, as is always the case with a party from which support has been slipping away, did they approve of their leaders’ recovering the initiative. They hailed ‘the first democratic Budget’, and they felt that they might recover something of the spirit of the ‘glad, confident morning’ of 1906.

  On some of the allies of the Government the effect was less encouraging. The Labour Party was well enough pleased,1 although its members had their reservations and found a number of occasions, starting with the vote on the Tea Resolution, for dividing against the Government. But the numerically more important Nationalist Party was far from content. Redmond2 spoke on Budget night and condemned the increased whisky tax and the excise duty on tobacco as unfair to Ireland; his party divided against them. A few days later he was seeing the issue in better perspective to the extent of describing the Budget as ‘admirable and courageous from the British point of view’, and saying that he would gladly see issue taken with the Lords on questions of social reform; but he remained adamant on his detailed criticisms, and neither on the second nor the third reading of the Finance Bill were the Nationalists able to support the Government.3 With the huge Liberal majority this was of no immediate parliamentary importance, but it was to become an issue of some significance in the next Parliament.

  So the long battle began. Every stage from the Chancellor’s opening of his Budget to the end of the Finance Bill’s passage through the Commons was contested by the Opposition with the utmost vigour and at the greatest possible length. Anyone who wishes to believe that pre-1914 Parliaments were always leisured and gentlemanly affairs, membership of which conflicted little with the life of a country squire, must keep his eyes firmly averted from the session of 1909. The parliamentary exertions of that year have not since been equalled.

  The Budget, as we have seen, was introduced on April 29. The debate on the various stages of the Resolution required fourteen days, and they were finally obtained only on May 26. Then came a long week-end, which was all that was possible in the way of a Whitsun recess.

  The House came back on Thursday, June 3, and on the following Monday the debate on the second reading of the Finance Bill was begun. This lasted for four full days, at the end of which Austen Chamberlain’s amendment to reject was defeated by 366 votes to 209. There was no cross-voting amongst the main parties. The House then occupied itself with other business until June 21, when the long marathon of the committee stage started. For four weeks the pattern was quite regular. Each Monday, Tuesday, and Wednesday was devoted to the bill, and such other business of the session as could not be postponed was fitted in on the Thursdays and the short Friday sittings.

  At first the Government did not allow the committee days to continue too late. In the first week motions to ‘report progress and ask leave to sit again’ were moved from the Treasury bench on successive nights at 11.30pm, midnight, and 2.45 am respectively. By the second week there was a deterioration, and the corresponding times were 2.45 am, midnight, and 4.0am. The third week was worse still, with the House at work on the bill until 4.0am on the first day’s sitting, 1.30am on the second, and 3.45am on the third. And in the fourth week it was a case of 2.45 am, 1.45 am, and 9.0 am. The principle of an ‘early night’ on the Tuesday was preserved, but its ‘earliness’ became less absolute.

  The fifth week began in a crescendo of lateness, with the Monday sitting lasting until 6.0am and the Tuesday sitting until 7.15am. But this pace of activity could not be continued. The next four full parliamentary days had to be devoted to Supply, and during this period of comparative relaxation the Government was able to consider the progress which it had so far made, and what were the future prospects for the bill. It was after July 20, and within two or three weeks of the date at which Parliament would normally expect to reach the end of the session. Fourteen days had already been devoted to the committee stage of the bill; largely as a result, the rest of the Government’s legislative programme for the year was in chaos. And, to show for this, the Government had obtained nine clauses of a bill which had started with seventy-four clauses and which was showing every sign of expansion.

  No one could have accused the Opposition of lack of tenacity. They talked about everything that could be talked about, and they divided against everything that could be divided against. For such progress as they were able to make, the Government had to rely upon a very free use of the closure. Whenever the House sat late the Opposition ensured that as much as possible of the time so gained was devoted, not to dealing with the bill, but to discussing whether or not it was proper to continue the debate at that hour. At 1.0am Arthur Balfour or Austen Chamberlain would move to report progress. This motion would not be used, as is now generally the case, merely to obtain from the Government a statement of their intentions for the night, but would be debated at length, usually until the closure was moved from the Government front bench. This would be divided against by the Opposition, who, when it was carried, would force the Government into the lobby again to defeat the motion to adjourn the debate. At three o’clock, and probably again at five o’clock, if the House were still sitting, Balfour or Chamberlain or one of their lieutenants would be on their feet once more to move the same motion, and the same tedious procedure would again be gone through. The maximum amount of sleep was lost, and the minimum of Government business was transacted.

  In these circumstances
the Government made three decisions. They and their supporters would have to reconcile themselves to a long summer at Westminster; a part even of the exiguous legislative programme of the session must be jettisoned; and there must be some change in the Standing Orders of the House so as to facilitate the passage of Government business. The two proposals under this last head were introduced by the Prime Minister on July 28. The first was certainly not very drastic. It provided that, when the House was in committee, the Deputy Chairman, and not merely the Chairman as had hitherto been the case, should have the right to accept a motion for the closure. The effect of this was both to relieve the burden on the Chairman during long sittings, and to make sure that whoever was leading for the Government1 should not be prevented from moving to bring the debate to an end at the earliest possible moment. The second introduced a device which came to be known as the ‘kangaroo’, and which permitted the Chairman or Deputy Chairman to call amendments, by leave of the House, from among those for which he had accepted the closure. This, in effect, enabled the Government to exclude discussion on amendments of no importance or over which discussion had already ranged, without the consequence of excluding certain others in the same group with which it would clearly be improper not to deal. These changes were only carried against strong Unionist opposition. Arthur Balfour described them as instituting ‘martial law in the House’, and the impartiality of the Chairman and his deputy was challenged. After divisions and a sitting which lasted until nearly one o’clock, the proposals were carried.

  The House returned to the Finance Bill on Monday, August 9, and devoted the whole of that week to it. There were two all-night sittings and instead of the normal short day on the Friday the House sat until dinner time. On the following Tuesday there was another all-night sitting,1 and this, together with a day lasting only until midnight on the Wednesday, brought another stage in the battle to an end. By this time Clause 27 had been reached, and the first part of the bill, dealing with the land taxes, was almost completed.