| ‹ 1908 · · 1910 › | |
David Lloyd George and Winston Churchill. |
|
| Presented | 29 April 1909 |
|---|---|
| Passed | 29 April 1910 |
| Parliament | 28th/29th |
| Party | Liberal Party |
| Chancellor | David Lloyd George |
| Website | Hansard |
The 1909 People's Budget was a product of then British Prime Minister H. H. Asquith's Liberal government, introducing many unprecedented taxes on the wealthy and radical social welfare programmes to Britain's political life. It was championed by Chancellor of the Exchequer David Lloyd George and his strong ally Winston Churchill, who was then President of the Board of Trade; the duo was called the "Terrible Twins" by contemporaries.[1]
Churchill's biographer, William Manchester, called the People's Budget "a revolutionary concept" because it was the first budget in British history with the expressed intent of redistributing wealth among the British public. It was a key issue of contention between the Liberal government and the Conservative-dominated House of Lords, ultimately leading to two general elections in 1910 and the enactment of the Parliament Act 1911.
Contents |
The Budget was introduced in the British Parliament by David Lloyd George on 29 April 1909.[2] Lloyd George argued that the People's Budget would eliminate poverty, and commended it thus:
This is a war Budget. It is for raising money to wage implacable warfare against poverty and squalidness. I cannot help hoping and believing that before this generation has passed away, we shall have advanced a great step towards that good time, when poverty, and the wretchedness and human degradation which always follows in its camp, will be as remote to the people of this country as the wolves which once infested its forests".[3]
The budget included several proposed tax increases to fund the Liberal government's welfare reforms. Income tax was held at nine old pence in the pound (9d, or 3.75%) for incomes less than £2,000, which was equivalent to £154,524 in today's money[4]—but a higher rate of one shilling (12d, or 5%) was proposed for incomes greater than £2,000, and an additional surcharge or "super tax" of 6d (a further 2.5%) was proposed on the amount by which incomes of £5,000 (£386,309 today[4]) or more exceeded £3,000 (£231,786 today[4]). An increase was also proposed in inheritance tax and naval rearmament.
More controversially, the Budget also included a proposal for the introduction of a land tax based on the ideas of the American tax reformer Henry George. This would have had a major effect on large landowners, and the Conservative-Unionist opposition, which consisted mostly of large landowners, had a large majority in the Lords. Furthermore, the Conservatives believed that money should be raised through the introduction of tariffs on imports, which was to benefit British industry and to raise revenue for social reforms at the same time (protectionism). Interestingly, according to economic theory, such tariffs would have been very beneficial for land owners, especially in agricultural produce (see Corn Laws).
The House of Lords vetoed the new budget on 30 November 1909,[5] setting the stage for a tremendous showdown, which Churchill relished. The Liberals countered by making their proposals to reduce the power of the Lords the main issue of the general election in January 1910. The Unionists won more votes than the Liberals but not more seats, and the outcome was a hung parliament, with the Liberals relying on Labour and the Irish Nationalists for their majority. The Lords accepted the Budget on 29 April 1910—a year to the day after its introduction[6]—when the land tax proposal was dropped, but contention between the government and the Lords continued until the second general election in December 1910, which resulted again in the Unionists gaining more votes than the Liberals but producing another hung parliament, with the Liberals again relying on Labour and the Irish Party. Nonetheless, the Lords passed the Parliament Act 1911.