1. Unit 2: Topic 2: The Constitutional Crisis

2. Introduction
This topic covers the conflict between the Liberal government and the Conservative opposition over the latter’s use of its built-in majority in the House of Lords to frustrate Liberal legislation. It looks particularly at the clash over the House of Lords’ rejection of Lloyd George’s budget in Then it looks at the ensuing crisis, which eventually led to the powers of the Lords being severely curtailed by the Parliament Act of 1911.

3. The place of the House of Lords in the Constitution
For Parliamentary bills to be enacted as laws they needed to be passed through both the House of Commons and the House of Lords as well as receive the royal assent. Although most bills started their lives in the Commons, the House of Lords was in a strong position to amend or even reject bills if it wished. This was particularly frustrating for the Liberal Party when it was in office, as most of the members of the House of Lords supported the Conservative Party.
The one exception to the rule that the Lords could amend or veto legislation was a money bill or, as we would normally describe it, a budget. The custom had developed that, while the House of Lords could reject money bills, it could not amend them. However, rejection was rarely considered, as it would precipitate a major constitutional crisis. This had been the case for a 250 year period.
The growth of a powerful and wealthy middle class, and the extensions of who could vote in 1832, 1867 and 1884 to all middle-class men and a large number of working-class men, had further strengthened the claims of the Commons to represent the nation. This strengthened the case of those Liberals who argued that the Lords’ powers should be reduced. By the turn of the century the hereditary principle was also increasingly being questioned.

4. The place of the House of Lords in the Constitution cont..
The Liberal Party took office at the end of 1905 under Sir Henry Campbell-Bannerman and consolidated its hold with a sweeping victory in the general election of January 1906, when it won 400 seats to the Conservatives’ 157. 

5. The Conservatives and the House of Lords
Balfour led the Conservatives kept control of the country when Liberal Governments were in power by encouraging the House of Lords to at best amend original Liberal Bills so they were barely recognizable or at worst, reject them..
An Education Bill (1906), a Plural Voting Bill (1906), a Land Reform Bill (1907) and a Licensing Bill (1908) were among those rejected by the Lords. The Liberal Party was furious and frustrated, and David Lloyd George was not exaggerating when he famously said in the House of Commons in 1907: ‘The House of Lords is not the watchdog of the Constitution; it is Mr Balfour’s poodle.’

6. The budget crisis, 1909
Lloyd George, the most prominent radical in the Liberal cabinet, had succeeded Herbert Asquith as Chancellor in 1908 when Asquith became prime minister. In the following year, Lloyd George’s budget led to a serious clash with the House of Lords. Needing to raise extra revenue to pay for, among other things, old age pensions and new battleships, Lloyd George proposed an increase in taxes to cover the unavoidable additional expenditure. He also saw a need to accumulate revenue for future welfare measures that he and colleagues had in mind. Some of these including health and unemployment insurance under the 1911 National Insurance Act would come to fruition between 1909 and 1911.This reasoning was the justification for what came to be known as the ‘people’s budget’ of 1909, which symbolised the New Liberal commitment to helping the needy by taxing the wealthy.   
Lloyd George’s preference was for direct taxation rather than for the Conservative solution of raising revenue via indirect taxation such as customs duties. He sought to implement this taxation by increasing death duties and imposing a new super-tax on annual incomes over £5,000. In addition, he proposed to tax landowners on any unearned increase in land values. This was the most controversial aspect of what proved a highly contentious budget. It provoked intense attacks both from the Conservative opposition in the House of Commons and from the House of Lords.
The main objections of the Lords were directed against the proposals to tax the profits derived by landowners from the increased value of their land, from site values and leaseholds, and from undeveloped land and mineral rights.

7. The budget crisis, 1909 cont..
These proposals would involve compulsory registration and valuation of land, and were thought by some to be the beginning of an attack on the private ownership of land. The Conservative Party also objected to what it argued was a misuse of the budget to tag on measures concerning land valuation and licensing, which it claimed should strictly have been the concern of separate bills.
Lloyd George in particular was ready to widen the conflict into an issue of the people versus the peers. During the summer and autumn of 1909, he provoked and even dared them to reject the budget, something that had not been done for over 250 years and thus forced a general election. He then hoped the Liberals would receive a clear mandate from the electorate to reform the House of Lords. 
Not all his colleagues relished the prospect of conflict as he did, though. The constitutional crisis was therefore a two-sided coin the Conservatives choosing to reject the budget, but with the Liberal Chancellor certainly goading them on.
During the summer of 1909, while the budget was being debated by the Commons, Lloyd George delivered a number of speeches in which he justified his proposals and attacked those who opposed them.

8. The Budget Crisis 1909
The budget proposals passed the House of Commons on 4 November 1909 by 379 votes to 149. The bitterness of Lloyd George’s attacks and the scorn and ridicule he poured on his opponents served only to make his Conservative critics more determined, and the evidence of debates in the House of Lords suggested that it would, indeed, throw out the budget. Lord Lansdowne was foremost among those who urged that the Lords should reject the budget.

9. Rejection of the budget
It was generally accepted that the House of Lords did not have the power to amend bills dealing with finance. The question of whether or not it should use its power to reject this bill outright was highly contentious. What was certain was that rejection would spark a fierce struggle between the Lords and the Commons, and raise the whole problem of the position of the House of Lords in the Constitution. Despite this, and as Lansdowne and The Times had advocated, the House of Lords rejected the budget on 30 November by 350 votes to 75.Asquith had no option but to dissolve Parliament and call a fresh general election to take place in January 1910, which was effectively about the powers of the House of Lords. Winning a massively reduced majority of just two over the Conservatives, the Liberal Party was able to continue in power. However, it now had to rely on the support of Irish MPs, who were not without their own selfish motives seeking, as they did, to persuade the Liberals to take up once again the mission of Gladstone and give Ireland Home Rule. 
The election figures were as follows.
Liberals 275
Conservatives 273
Irish Nationalists 83
Labour 40
The Conservatives, accepting the verdict of the electorate, grudgingly allowed the passage of the budget in due course.

10. The Parliament Bill Crisis 1910 - 11
The constitutional crisis now entered a second phase. Supported by the Irish MPs who had their own reasons for wanting the power of the Lords removed, the Liberals did not let the matter rest and introduced a bill to restrict the Lords’ power of veto. Asquith also asked King Edward VII for a guarantee that if the Lords rejected the bill he would permit the creation of a large number of Liberal peers in order to swamp the Conservative majority in the Lords. Before much else could be done, however, Edward died. The new king, George V, supported the idea of a cross-party constitutional conference to try to arrive at consensus. He stated that he would only sanction the creation of new peers after a general election had been held in which this issue was discussed. The conference failed to produce an agreed solution. Consequently, in December 1910 another election took place. The result was virtually the same as in January and, re-confirmed in power, the Liberal Party introduced its bill. 
Under the Parliament Bill a money bill could become law without the assent of the House of Lords. Other bills would need its assent but could only be delayed, and if a bill passed the Commons three times within two years it would become law without the Lords’ agreement.
Faced with the threat of creating peers that supported the Liberal Party if it rejected it, the Lords grudgingly gave in; the Parliament Bill was subsequently passed in August However, many peers, known as the ‘ditchers’ (that is, fighting to the last ditch) still voted against, and the ‘hedgers’ (those Conservatives reluctantly ready to give way) did not have it all their own way. The final vote was 131 to 114.
The Parliament Act marks an important milestone in the evolution of the Constitution. In curbing the power of the House of Lords to reject legislation passed by the Commons, it only left the Lords the power to amend and delay legislation.

11. The Parliament Act Terms
An Act to make provision with respect to the powers of the House of Lords in relation to those of the House of Commons, and to limit the duration of Parliament. … Whereas it is expedient that provision should be made for regulating the relations between the two Houses of Parliament:
And whereas it is intended to substitute for the House of Lords as it at present exists a Second Chamber constituted on a popular instead of hereditary basis, but such substitution cannot be immediately brought into operation:
And whereas provision will require hereafter to be made by Parliament in a measure effecting such substitution for limiting and defining the powers of the new Second Chamber, but it is expedient to make such provision as in this Act appears for restricting the existing powers of the House of Lords: Be it therefore enacted ...
1 (1) If a Money Bill, having been passed by the House of Commons, and sent up to the House of Lords at least one month before the end of the session, is not passed by the House of Lords without amendment within one month after it is so sent up to that House, the Bill shall, unless the House of Commons direct to the contrary, be presented to His Majesty and become an Act of Parliament on the Royal Assent being signified, notwithstanding that the House of Lords have not consented to the Bill. …
2 (1) If any Public Bill (other than a Money Bill or a Bill containing any provision to extend the maximum duration of Parliament beyond five years) is passed by the House of Commons in three successive sessions (whether of the same Parliament or not), and, having been sent up to the House of Lords at least one month before the end of the session, is rejected by the House of Lords in each of those sessions, that Bill shall, on its rejection for the third time by the House of Lords, unless the House of Commons direct to the contrary, be presented to His Majesty and become an Act of Parliament on the Royal Assent being signified thereto, notwithstanding that the House of Lords have not yet consented to the Bill: Provided that this provision shall not take effect unless two years have elapsed between the date of the second reading in the first of those sessions of the Bill in the House of Commons and the date on which it passes the House of Commons in the third of those sessions. …
7 Five years shall be substituted for seven years as the time fixed for the maximum duration of Parliament under the Septennial Act, 1715.
Source: Parliament Act, 1911

12. The Parliament Bill Crisis 1910 -11
The ‘Tory Rebellion’ did not stop with the passage of the Parliament Act. The Conservative Party was left with the ability to delay non-financial legislation for two years. This was a significant power still, especially in the last two years or so of a government’s life.
The pragmatism of the ‘hedgers’ had ensured that Liberal peers were not created to swamp the traditional Conservative majority in the Lords. Left with their majority, the Conservative peers could at least delay long enough to give the electorate its say on contentious Liberal bills. Section 7 of the act, reducing the life of a Parliament to a maximum of five years, meant that it was only in the first three years of a government’s life that it could expect to push non-financial legislation through irrespective of opposition in the House of Lords.

13. Summary
Now that you have finished this topic you should feel confident that you can recount the main elements of the constitutional crisis of As you have seen, this short period witnessed a significant advance towards both a more caring society (with the passage of the ‘people’s budget’) and a more democratic system of government (with the passage of the Parliament Act).
The decision to introduce salaries for MPs in that same year was another important step particularly helpful to the small group of Labour MPs in the Commons. The use of veto by the Tory-dominated House of Lords had long aggravated the Liberals while in government, but it was Conservative leader Balfour’s determination to use the Lords’ ‘Mr Balfour?s Poodle’ much more consistently as a block on legislation that provoked the major crisis. The immediate cause was Lloyd George’s budget of How far Chancellor Lloyd George intended to provoke a crisis with his ‘war budget’ against privilege is still a matter for debate, although there is little doubt that he and many of his colleagues welcomed conflict and the opportunity to reform the Lords once the crisis came. 
The ‘people’s budget’ introduced higher taxation. But the most controversial element was the proposal to tax unearned increments on land values and it was largely this that led to the Lords rejecting the budget. The January 1910 general election returned the Liberals albeit without an overall majority. However, the parties holding the balance of power the Irish and the Labour Party supported Liberal proposals to curb the Lord’s power of veto.
Following a further general election in December 1910, a Parliament Act to restrict the Lords’ power was eventually passed in Faced with the threat of its built-in majority in the Lords being swamped by hundreds of new Liberal peers, sufficient numbers of Conservatives in the Lords reluctantly accepted the proposals.

14. Further Reading
Constantine, S, Lloyd George, Routledge Lancaster Pamphlets, 1992
Evans, E J, The Birth of Modern Britain, 1780?1914 (Chapters 30 and 31), Addison Wesley Longman Advanced History series, 1997
Hay, J R, The Origins of the Liberal Welfare Reforms, 1906?14, Macmillan Studies in Economic and Social History, 1975
O?Day, A (ed.), The Edwardian Age: Conflict and Stability, 1900?14, London, Macmillan Problems in Focus, 1979
Pearce, R and Stearn, R, Government and Reform, 1815?1918, Hodder & Stoughton, 1998
Pearce M and Stewart, G, British Political History, 1867?1995 (Chapters 1?3), Routledge, 1996
Pugh, M, Lloyd George, Longman Profiles in Power, 1988
Read, D, The Age of Urban Democracy, 1868?1914, Longman, 2nd edn, 1994
Rees, R, Poverty and Public Health, 1815?1914, Heinemann Advanced History series, 2000
Watts, D, Whigs, Liberals and Radicals, 1815?1914 (Chapter 6), Hodder & Stoughton Access to History series, 1995