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“Battered and Shattered”: Lloyd George and the 1914 Budget Fiasco

Published online by Cambridge University Press:  11 July 2014

Bruce K. Murray
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Extract

In June 1914 David Lloyd George, Liberal Chancellor of the Exchequer, capitulated to opposition from within his own party and withdrew from the Budget for 1914–15 his proposals to revise the system of Exchequer grants to local authorities and to establish land value rating. Withdrawal was a considerable political humiliation for Lloyd George. “His stock stands low in the party,” commented his friend, Lord Riddell, in his diary. “The Budget has been a fiasco.” What went wrong with the 1914 Budget is the concern of this article.

Lloyd George's 1914 Budget incorporated two distinct strategies. The first comprised a fiscal strategy designed to provide in a single “taxing” Budget for the needs of both the Navy and the reorganization of local government finance and taxation. The second constituted part of a wider political strategy intended to furnish a reform program that would enable the Liberals to make a powerful progressive appeal at the next general election, due by the end of 1915. The first was supposed to serve the second, but in the event had the opposite result. It prompted Lloyd George to abandon his original plan of building up to a major reform Budget in 1915 and to proceed instead to include in the 1914 Budget “provisional” grants to local authorities before he had prepared the groundwork, administratively, legislatively or politically, for a new system of grants and rating. At all levels, the enterprise was premature, and simply presented a group of discontented wealthy Liberals in the Commons with the opportunity to stage an effective protest against the direction of Liberal finance.

Type
Research Article
Information
Albion , Volume 23 , Issue 3 , Fall 1991 , pp. 483 - 507
Copyright
Copyright © North American Conference on British Studies 1991

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References

1 Riddell, Lord, More Pages From My Diary 1908–1914 (London, 1934), p. 218 Google Scholar.

2 While the 1914 Budget has not attracted the extensive attention of Lloyd George's “People's Budget,” it has not been without its historians. See Cameron Hazlehurst, Politicians at War (London, 1971), pp. 104–07; Bentley B. Gilbert, “David Lloyd George: The Reform of British Landholding and the Budget of 1914,” Historical Journal 21 (1978): 117–41; Emy, H. V., Liberals, Radicals and Social Politics 1892–1914 (Cambridge, 1973), pp. 224–34CrossRefGoogle Scholar; Offer, A., Property and Politics 1870–1914 (Cambridge, 1981), pp. 401–06Google Scholar; Grigg, John, Lloyd George: From Peace to War 1912–1916 (London, 1985), pp. 89–107 Google Scholar; and Bernstein, George L., Liberalism and Liberal Politics in Edwardian England (Boston, 1986), pp. 143–47Google Scholar. For the preparation of this article I am grateful to Professor A. J. A. Morris and Mr. G. B. Neame for their advice. I am also grateful to the Human Sciences Research Council for their financial support.

3 For the “People's Budget,” see Murray, B. K., “The Politics of the People's Budget,” Historical Journal 16 (1973): 555–70CrossRefGoogle Scholar, and The People's Budget 1909–10: Lloyd George and Liberal Politics (Oxford, 1980)Google Scholar.

4 Peacock, A. T. and Wiseman, J., The Growth of Public Expenditure in the United Kingdom (London, 1961), p. 197 Google Scholar.

5 Departmental Committee on Local Taxation: Final Report, Cd. 7315, pp. 9–10.

6 Montagu to Buckmaster, 28 April 1914, Trinity College, Cambridge, Montagu Papers AS6/9/1 [hereafter cited as MP].

7 The Economist, 27 June 1914.

8 Chalmers to Runciman, 13 July 1914, University of Newcastle upon Tyne, Runciman Papers 135.

9 See Murray, B. K., “Lloyd George, the Navy Estimates, and the inclusion of rating relief in the 1914 Budget,” Welsh History Review 15 (1990): 58–78 Google Scholar.

10 Montagu to Lloyd George, 19 June 1914, MP, AS6/11/2.

11 Pease Diary, 30 January 1914, Nuffield College, Oxford, Gainford Papers 39.

12 House of Commons Debates, 5th Series, vol. 65, pp. 676–85Google Scholar.

13 Lloyd George to Illingworth, 24 October 1913, House of Lords Record Office, Lloyd George Papers C/5/4/7 [hereafter cited as LGP].

14 See Offer, Property and Politics, chs. 22 & 23.

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16 Nathan memorandum of interview, 28 January 1914, Bodleian Library, Oxford, Nathan Papers 429; Nathan memorandum of interview, 29 January 1914, Public Record Office, Inland Revenue 63/46 [hereafter cited as IR]; Nathan to Lloyd George, 2 February 1914, LGP, C/6/6/6.

17 Hopkins memorandum of meeting, 24 February 1914, P.R.O., IR 63/35.

18 Nathan to Lloyd George, 27 February 1914, Public Record Office, Treasury 171/69 [hereafter cited as T].

19 Harper memorandum, 28 February 1914, and Hopkins to Nathan, 3 March 1914, P.R.O., 1R 63/35.

20 Lloyd George to his brother, 11 March 1914, George, W., My Brother and I (London, 1958), p. 248 Google Scholar.

21 Montagu to Buckmaster, 28 April 1914, MP, AS6/11/1. For a critique of Harper's contribution, see Offer, Politics and Property, pp. 396–97.

22 For a summary of the committee's conclusions and recommendations, see ch. 15 of the report.

23 The balance sheet for 1913–14 showed an excess of actual over estimated revenue of £3.5 million, with the Inland Revenue contributing £2 million over the estimate. The significance of these results was that they required an upward revision of the estimated returns from the existing taxes for 1914—15. Lloyd George insisted, against Reade's protests, that £450,000 be trimmed from the new Customs and Excise estimate of £75,450,000, but the revised Inland Revenue estimate of £90,375,000, as against £87.5 million on 21 February, remained intact. For estimates and returns, see Nathan to Lloyd George, 21 February, 12 & 31 March 1914, and Nathan memorandum of interviews, 17 April 1914, P.R.O., IR 63/46.

24 Samuel to Lloyd George, 16 April 1914, P.R.O., T 171/71. The Education Board, assisted by Lord Haldane, was devising its own scheme new grants for education. For Haldane's role, see Ashby, E. and Anderson, M., Portrait of Haldane at Work on Education (London, 1974), pp. 115–17Google Scholar. See also Haldane to Lloyd George, 15 & 26 April 1914, LGP, C/4/17/5–6. For the Board of Education's proposals relating to the 1914 Budget, see P.R.O., T 171/76 & 80.

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27 Samuel to Lloyd George, 20 April 1914, P.R.O., T 171/71.

28 “Memorandum by Mr. Harper,” 22 April 1914, and Nathan to Hamilton, 22 April 1914, P.R.O., T 171/69.

29 Samuel to Lloyd George, 23 April 1914, P.R.O., T 171/71.

30 John Bradbury's advice was to abandon the whole scheme for major new Exchequer grants. In a memorandum of 21 April he reiterated traditional Treasury hostility to substantial new grants in relief of rates: “To substitute new Imperial taxes which will be a real burden for what is now in the vast majority of cases merely a rent-charge on real property is to plunder the community for the purpose of giving bonuses to persons interested in real property.” Instead, he recommended a scheme for the reduction of rates on new improvements only (“Reduction of Rates on Improvements,” Bradbury, 21 April 1914, P.R.O., T 171/71).

31 Pease Diary, 24 April 1914, Gainford Papers 39; Riddell Diary, 23 June 1914, Ridded, , More Pages, p. 215 Google Scholar.

32 Montagu to Buckmaster, 28 April 1914, MP, AS6/9/1.

33 Montagu to Lloyd George, 29 April 1914, MP, AS6/11/1.

34 Riddell Diary, 25 April 1914, Riddell, , More Pages, p. 210 Google Scholar; Lloyd George to Samuel, 25 April 1914, LGP, C/7/9/4.

35 “Use of Valuation under Finance (1909–10) Act, 1910, for Local Taxation and other purposes,” Nathan, 2 May 1914, P.R.O., T 171/69.

36 Burns Diary, 30 April 1914, British Library, Add. MSS. 46336.

37 Asquith to the King, 2 May 1914, Bodleian Library, Oxford, Asquith Papers 7 [hereafter cited as AP].

38 Addison, Christopher, Politics From Within 1911–1916 (London, 1924), pp. 28–29 Google Scholar; Kenneth, and Morgan, Jane, Portrait of a Progressive: The Political Career of Christopher Viscount Addison (Oxford, 1980), p. 28 Google Scholar.

39 Asquith to the King, 2 May 1914; Nathan memorandum of interview, 1 May 1914, P.R.O., IR 63/46. For the preparation of the income tax and super tax proposals, undertaken by Nathan with some assistance from Bradbury, see Nathan to Lloyd George, 2 February 1914, LGP, C/6/6/6 and Budget 1914 P.R.O., T 171/60–62.

40 “Estimate of Number of Persons Paying Different Virtual Rates of Income Tax,” 30 April 1914, P.R.O., IR 63/46.

41 Asquith to the King, 2 May 1914, AP, 7.

42 Nathan Diary, 30 April 1914, Nathan Papers 49. Final adjustments to the Budget prior to its presentation to the Commons were made on 3 May when Lloyd George's advisers met with him at Walton Heath. The income tax rates for earned incomes between £1,000 and £3,000 were subject to further graduation, resulting in a loss of £150,000 in the estimate for 1914–15. It was also agreed that the yield for the new rates of death duties could not be put as low as £300,000, and it was consequently revised upwards to £800,000. This was accompanied by a corresponding reduction in the estimate of the yield from the death duties at existing rates (Nathan memorandum of interview, 3 May 1914, P.R.O., IR 63/46).

43 Asquith to Venetia Stanley, 5 May 1914, Brock, , Asquith Letters, p. 70 Google Scholar.

44 House of Commons Debates, 5th. ser., vol. 62, pp. 56–94 Google Scholar.

45 Mallet, B. and George, C. O., British Budgets 1913–14 to 1920–21 (London, 1929), p. 34 Google Scholar.

46 House of Commons Debates, 5th. ser., vol. 62, p. 528 Google Scholar.

47 Finance Bill, 14 May 1914, P.R.O., IR 63/47.

48 House of Commons Debates, 5th. ser., vol. 62, pp. 460–61Google Scholar.

49 Churchill to his wife, 5 May 1914, Churchill, R. S., Winston S. Churchill (London, 1966–1967), companion vol. 2, pt. 3, p. 1975 Google Scholar.

50 See The Economist and Nation, 9 May 1914. According to the Annual Register, there had been considerable speculation that the Budget would reduce or abolish the sugar, tea, coffee, and cocoa duties, and increase those on alcoholic liquors: “But the Budget proved to be less sensational than was expected” (Annual Register 1914, p. 93).

51 Riddell Diary, 14 June 1914, Riddell, , More Pages, pp. 214–15Google Scholar; Masterman to Ponsonby, 30 May 1914, Bodleian Library, Oxford, MS. Eng. Hist. c. 660.

52 Asquith to Venetia Stanley, 18 June 1914, Brock, , Asquith's Letters, p. 89 Google Scholar.

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54 Ilbert Diary, 19 June 1914, House of Commons Library MS. 77.

55 Asquith to the King, 23 June 1914, AP, 7.

56 House of Commons Debates, 5th. ser., vol. 63, pp. 1567–72Google Scholar.

57 Ilbert Diary, 22 June 1914.

58 Manchester Guardian, 22 June 1914.

59 House of Commons Debates, 5th. ser., vol. 63, pp. 1575–92Google Scholar.

60 Ibid., pp. 2100–09.

61 The Times, 26 June 1914.

62 Asquith to the King, 14 July 1914, AP, 7.

63 Tke Times, 14 July 1914.

64 Offer, Property and Politics, ch. 18.

65 Notes of C.J. Howell Thomas, 4 and 5 April 1914, P.R.O., T 171/70.

66 Lloyd George to Asquith, 5 December 1913, AP, 25.

67 Final Report, p. 13. According to Lloyd George in his Budget speech, workmen in town contributed about 5% of their income to rates, supertax payers 1% or 2%, provincial traders 9%, and London traders 13% ( House of Commons Debates, 5th ser., vol. 62, pp. 66 Google Scholar).

68 Thomas notes, 4 and 5 April 1914, P.R.O., T 171/70.

69 Samuel to Lloyd George, 16 April 1914, P.R.O., T 171/71.

70 The Land, vol. 2, pt. 4.

71 Heath to Lloyd George, 4 December 1913, LGP, C/2/3/55.

72 Trevelyan to his wife, 6 January 1913, quoted in A. Morris, J. A., C. P. Trevelyan 1870–1958: Portrait of a Radical (Belfast, 1977), p. 93 Google Scholar.

73 Carrington Diary, 8 July 1914, Bodleian Library, Oxford, MS Film 1107.

74 Holt Diary, 19 July 1914, Liverpool Record Office, Holt Papers.

75 Asquith to Venetia Stanley, 18 June 1914, Brock, , Asquith's Letters, p. 89 Google Scholar.

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77 Ibid., pp. 2030–42.

78 “Preliminary Report to the Board of Inland Revenue on the Administrative Aspects of the Valuation Provisions of the Budget and Revenue Bill, 1914,” P.R.O., IR 63/39.

79 Masterman to Ponsonby, 30 May 1914, Bodleian Library, Oxford, MS Eng. Hist. c. 660.

80 See reports of W. Finnemore, C. Hughes, C. Perry, and H. Storey to Lloyd George, 29 May 1914, LGP, C/2/4/22–26.

81 Storey to Lloyd George, 29 May 1914. See also G. W. Carter to Lloyd George, 28 May 1914, LGP, C/2/4/20 & 26.