The Second Labour Government was formed by Ramsay MacDonald on his second appointment as Prime Minister of the United Kingdom on 5 June 1929. As the name suggests it was the second occasion on which the Labour Party had formed a government; the First Labour Government held office during 1924.
The government lacked a parliamentary majority, gaining 288 seats with 8,300,000 votes compared to the Conservatives 255 seats with 8,560,000 votes - a victory based on first past the post.They needed Lloyd-George's 58 Liberal seats to pass any legislation. They also faced the problems stemming from the impact of the Great Depression. On the one hand, international bankers insisted that strict budget limits be kept, on the other trade unions and, particularly, unemployed workers' organizations carried on regular and massive protest actions, including a series of hunger marches.
The Government did try to pass legislation, such as the Coal Mines Act 1930, which provided for a 71/2 hour shift in mines. Owners were guaranteed coal prices through the introduction of a production quota system among collieries, thus doing away with cut-throat competition. This guarantee was introduced in order to prevent a fall in miners’ wages.[1] The Act also introduced a cartel scheme to allocate production quotas to pits under the control of a central council, while a Mines Reorganisation Commission was established to encourage efficiency through amalgamations. However, this legislation largely ignored by the mine owners due to Labours' lack of enforcement powers.[2] There was also the Land Utilisation Act of 1931, which would have given Labour powers to purchase land anywhere in the United Kingdom, but it was mauled by the House of Lords and had no backing from the treasury, so it was essentially a "dead letter". Other acts passed include the Agricultural Marketing Act 1931 (which established a board to fix prices for produce),[3] Greenwood's Housing Act 1930 (which provided subsidies for slum clearance[4]) and the London Transport Bill 1931 - see London Passenger Transport Board - this was made legislation in 1933, after the Government had fallen.
Immediate measures carried out by the government upon taking office included a temporary amendment of the Unemployment Insurance Acts, increasing the State contribution to the Fund, a Development Act authorising grants up to £25,000,000 and a further £25,000,000 in guarantees for public works schemes designed to reduce unemployment, a parallel Colonial Development Act authorising grants up to £1,000,000 a year for schemes in the Colonies, a measure continuing at the existing levels the subsidies under the Housing Acts, which the Conservatives had threatened to reduce, and a removal of the appointed Guardians whom the Conservatives had put in office in place of the elected Boards in Bedwellty, Chester-le-Street, and Westham.[5] Changes were also made to the taxation system that resulted in the poor paying less tax and the rich paying more.[6]
The Widows’ and Old Age Pensions Act was amended to cover some hundreds of thousands of additional pensioners, under improved conditions[7], with the inclusion of widows between the ages of 55 and 70.[8] A further unemployment insurance Act re-drafted the terms of benefit, so as to remove the major part of the grievance relating to the disqualification of persons alleged to be “not genuinely seeking work,” which led to greater numbers of people acquiring unemployment assistance.[9] Other measures carried out in 1929-30 included the Road Traffic Act(which introduced third party insurance to compensate for property damage and personal injury, and made better provisions for road safety[10]), the Land Drainage Act (which provided some degree of progress in river management,[11] the Public Works Facilities Act (conferring easier borrowing powers), and the Mental Treatment Act 1930. The 1930 Labour budget provided for largely increased expenditure, contained measures to prevent tax evasion, raised the standard rate of income tax as well as the surtax while making concessions to the smaller taxpayer.[12] Another housing act was passed, concerned with the provision of more and better rural housing, and a town and country planning act gave local authorities more power to control local and regional planning.[13]
The Unemployment Insurance Act of 1929 scrapped the “genuinely seeking work” clause in unemployment benefit (which was originally abolished by the First Labour Government in 1924, and reintroduced by the Conservatives in 1928), increased dependants’ allowances, extended provision for the long-term unemployed, relaxed eligibility conditions, and introduced an individual means test. The National Health Insurance (Prolongation of Insurance) Act of 1930 extended provision of health insurance to unemployed males whose entitlement had run out, while the Poor Prisoners Defence Act of 1930 introduced criminal legal aid for appearances in magistrates’ courts. The Housing (Scotland) Act and Housing Act 1930 provided local authorities with additional central government subsidies to construct new homes for people who had been moved out of slum clearance areas.[14]
The 1930 Poor Law Act abolished the workhouse test[15] and replaced the Poor Law with public bodies known as Public Assistance Committees for the relief of the poor and destitute, while Poor Law hospitals came under the control of local authorities.[16] The lid was kept on the (then) ever present risk of a naval arms race, while the system of naval officer recruitment was reformed to make it less difficult for working-class sailors to secure promotion from the ranks.[17] George Lansbury, the First Commissioner of Works, sponsored a “Brighter Britain” campaign and introduced a number of facilities in London parks such as mixed bathing, boating ponds,[18] and swings and sandpits for children.[19]
The Second Labour Government’s achievements in social policy were, however, overshadowed by the government’s catastrophic failure to tackle the effects of the Great Depression, which left mass unemployment in its wake. Spending on public works was accelerated, although this proved to be inadequate in dealing with the problem. By January 1930, 1.5 million people were out of work, a number which reached almost 2 million by June, and by December it topped 2.5 million.[20] The Lord Privy Seal Jimmy Thomas, who was put in charge of the problem of unemployment, was unable to offer a solution,[21] while Margaret Bondfield also failed to come up with an imaginative response.[22] Other members of the cabinet, however, put forward their own imaginative proposals for dealing with the Depression.
George Lansbury proposed land reclamation in Great Britain, a colonising scheme in Western Australia, and pensions for people at the age of sixty, while Tom Johnston pushed for national relief schemes such as the construction of a road round Loch Lomont (Thomas was successful in getting a coach road from Aberfoyle to the Trossachs rebuilt). These and similar schemes, however, failed in the unemployment Committee (a group composed of Thomas and his assistants Johnston, Lansbury, and Oswald Mosley to develop a solution to the unemployment problem), where the four ministers received negative responses to their proposals from the top civil servants from the various government departments.[23]
The one minister whose proposals may have helped Britain to recover quickly from the worst effects of the Great depression was Oswald Mosley, a former member of the Conservative Party. Frustrated by the government’s economic orthodoxy (a controversial policy upheld by the fiscally conservative Chancellor, Philip Snowden), Mosley submitted an ambitious set of proposals for dealing with the crisis to the Labour Cabinet in what became known as “Mosley’s Memorandum.” These included much greater use of credit to finance development through the public control of banking, rationalisation of industry under public ownership, British agricultural development, import restrictions and bulk purchase agreements with foreign (particularly Imperial) producers, protection of the home market by tariffs, and higher pensions and allowances to encourage earlier retirement from industry and to increase purchasing power.[23] Although Macdonald was said to have been sympathetic to some of Mosley’s proposals, these were rejected by Snowden and other members of the Cabinet, which to led Mosley to resign in frustration in May 1930. The government continued to adhere to an orthodox economic course,[20] as characterised by the controversial decision of the Minister of Labour Margaret Bondfield to push through Parliament an Anomalies Act, aimed at stamping out apparent “abuses” of the unemployment insurance system. This legislation limited the rights of short-time, casual and seasonal workers and of married women to claim unemployment benefit, which further damaged the reputation of the government amongst most Labour supporters.[24]
In the summer of 1931, the government was gripped by a political and financial crisis as the value of the pound and its place on the Gold Standard came under threat over fears that the budget was unbalanced. A run on gold began when a report by the May Committee estimated that there would be a deficit of £120 million by April 1932, and recommended reductions in government expenditure and higher taxes to prevent this.[21]
Macdonald’s cabinet met repeatedly to work out the necessary cutbacks and tax rises, while at the same time seeking loans from overseas. It later became clear that the bankers in New York would only provide loans if the government carried out significant austerity measures, such as a 10% reduction in the dole. During August 1931, the Cabinet struggled to produce budget amendments that were politically acceptable but proved unable to do so without causing mass resignations and a fullscale split in the party. The particular issue on which the split occurred was the vote of the cabinet after much discussion to reduce benefit paid to unemployed people under the National Assistance scheme. The Cabinet was unable to reach an agreement on this controversial issue, with nine members opposing the reduction in the dole and eleven supporting it, and on 24 August 1931 the government formally resigned.[21]
The Second Labour Government was succeeded by the First National Ministry, also headed by Ramsay MacDonald and made up of members of Labour, the Conservatives and Liberals, calling itself a National Government. Viewed by many Labourites as a traitor, Macdonald was subsequently expelled from the Labour Party, and remained a hate figure withi the Labour Party for many years thereafter, despite his great services to his party earlier in his life.[21]
The circumstances surrounding the downfall of the Second Labour Government, together with its replacement by the National Government and its failure to develop a coherent economic strategy for dealing with the effects of the Great Depression, have provoked massive controversy amongst historians ever since.
Members of the Cabinet are in bold face.
| Preceded by Conservative Government 1924–1929 |
Government of the United Kingdom 1929–1931 |
Succeeded by First National Government 1931 |