Political developments: Liberals, Lords and Labour
The Liberal Landslide of 1906
The general election of January 1906 transformed British politics. The Conservatives, associated with the Boer War and with Joseph Chamberlain’s controversial tariff reform proposals, suffered a crushing defeat. The Liberals won 397 seats and formed a majority government. Their victory was reinforced by an informal pact with the newly formed Labour Representation Committee, which won 29 seats and became the Labour Party.
The new Liberal government faced immense social and political challenges. Reports by Charles Booth and Seebohm Rowntree had revealed that roughly one-third of the population lived in poverty. At the same time, the House of Lords remained dominated by Conservative peers who were ready to reject legislation they disliked. The collision between Liberal ambition, social need and aristocratic obstruction defined the decade before the First World War.
The Liberals won 397 seats in January 1906, the largest majority in British history to that point. The Labour Party was formally established the same year, winning 29 seats.
The People’s Budget, 1909
The constitutional crisis began with the budget of April 1909, introduced by Chancellor David Lloyd George. He needed to raise money to pay for both the new welfare reforms (old age pensions had come into force in 1908) and an expensive naval arms race with Germany. Lloyd George proposed new taxes targeting the wealthy: a super-tax on high incomes, increased death duties, a 20 per cent tax on land value increases (the “land tax”), and increased income tax.
Lloyd George deliberately presented the budget as a class confrontation. He gave speeches attacking hereditary landowners, famously asking: “A fully equipped duke costs as much to keep up as two Dreadnoughts; and dukes are just as great a terror, and they last longer.” This rhetoric united Liberal and Labour support behind the budget but inflamed Conservative and aristocratic opposition. When the Commons passed the budget in November 1909, the House of Lords rejected it by 350 votes to 75 — breaking the constitutional convention that the Lords did not block money bills.
Prime Minister Asquith called two general elections in 1910 — in January and December — to seek a mandate to curb the Lords’ power. Both elections returned a hung Parliament: the Liberals and Labour depended on the votes of Irish Nationalist MPs, who supported reform in exchange for a promise of Irish Home Rule. King George V’s agreement (under pressure) to create up to 500 new Liberal peers — which would have swamped the Conservative majority in the Lords — forced the Lords to capitulate. Many Conservative peers chose to abstain rather than face dilution; the Parliament Bill passed in August 1911.
The Parliament Act, 1911
The Parliament Act 1911 was a landmark constitutional reform. It established that:
- The House of Lords could not reject or amend money bills (the Speaker of the Commons would certify what counted as a money bill).
- The Lords could delay other legislation by up to two years, but could not block it permanently.
- General elections would be held every five years, not seven (reducing the parliament term from seven years).
The Act fundamentally shifted the balance of power between the elected Commons and the unelected Lords. It also made it possible for the Liberals to pass controversial legislation — including Home Rule for Ireland and Welsh Church Disestablishment — even against Lords opposition, since the Lords could only delay, not defeat, such bills.
The Parliament Act 1911 removed the Lords’ power to block money bills entirely and limited their power over other legislation to a two-year delay. It was the most significant restriction of Lords power since the English Civil War.
The Rise of Trade Unions and Labour
The period 1900–1914 saw the trade union movement grow dramatically. Membership rose from around 2 million in 1900 to over 4 million by 1914. The unions faced a serious legal challenge when the Taff Vale case of 1901 established that unions could be sued for losses caused by strikes, exposing union funds to ruinous claims. This pushed the trade union movement firmly into politics: it was a major reason why unions funded Labour candidates in 1906.
The Liberal government reversed the Taff Vale judgement with the Trade Disputes Act 1906, which restored trade union immunity from damages claims. However, a second legal threat came with the Osborne judgement of 1909, which ruled that trade unions could not use their funds to pay MPs’ salaries or support political parties. Since Labour MPs depended on union wages (no MPs were paid from public funds until 1911), this threatened Labour’s existence. The payment of MPs was introduced in 1911, and the Trade Union Act 1913 restored the right of unions to support political parties.
Keir Hardie was the most prominent early figure of the Labour movement. A former coal miner from Scotland, he was elected to Parliament in 1892 as one of the first working-class MPs and consistently argued that only a party independent of the Liberal Party could truly represent workers’ interests. He co-founded the Independent Labour Party in 1893 and was a key figure in creating the Labour Representation Committee in 1900, which became the Labour Party in 1906. Hardie opposed the Boer War and later campaigned against Britain’s entry into the First World War.