Policy Papers

The 1909 budget and the destruction of the unwritten constitution

Iain McLean |

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Executive Summary

  • The centenary of the Lords' rejection of the 'People's Budget' in November 1909 is a good occasion to review the constitutional crisis that began with their rejection and lasted until spring 1914.
  • The crisis destroyed the traditional doctrine of the unwritten British constitution both as a description of what happens and as a prescription of what ought to happen.
  • The doctrine holds both that Parliament is sovereign and that it ought to be.
  • However, for those five years Parliament was not sovereign because it was deadlocked.
  • When it seemed that the elected house would finally get its way over the two unelected houses (Lords and monarch), the politicians and lawyers who had defended, and even defined, parliamentary sovereignty abandoned the doctrine in favour of an ill-defined conception of popular sovereignty.
  • But for the outbreak of World War I, the consequence would quite possibly have been an outbreak of civil war in the United Kingdom.
  • The lesson for modern policy discussion is that a constitution that cannot withstand an opposition coup d'état should be scrapped in favour of one that entrenches popular sovereignty.
  • Although an elective dictatorship of the Commons (in effect of the governing party) is to be avoided, any checking and balancing bodies must also be answerable to the people.

King, Lords, and people: the first phase

The General Election of 1906 marked one of the largest swings to the left in British democratic history. At the previous General Election in 1900, the Conservatives - then known as Unionists - had won 402 seats; the Liberals 186 (if the two Labour members are counted with them), and Irish nationalists a practically invariant 82, as they did in every election from 1885 to 1910. In 1906 these numbers flipped. Liberals won 400 seats; Labour won 30 after a secret non-aggression pact with the Liberals; and Irish nationalists 83. Against these three forces of what contemporaries sometimes called the 'progressive alliance', the Unionists mustered a mere 157.

The results in terms of the popular vote were closer. This is because of the well-known exaggerative effects of the British electoral system. It was after his defeat in 1906 that a Unionist ex-MP and statistician, James Parker Smith, first discovered the so-called 'cube law' describing the exaggerative effects. Roughly, as between the top two parties, the ratio of their seat shares is the cube of the ratio of their popular vote shares. So a Unionist landslide became a Liberal landslide after a relatively modest net transfer of votes.

Nevertheless, what is sauce for the goose is sauce for the gander. Nobody saw the exaggerated Unionist victories of 1895 and 1900 as reasons for a coup d'état against the governments of Lord Salisbury and his nephew Arthur Balfour. By contrast, the Unionist coup d'état against the three Liberal governments elected at the General Elections of 1906 and 1910 had momentous consequences. It probably worsened the tragedy of Ulster; and it certainly destroyed the unwritten British constitution.

Facing the Liberal-dominated Commons was a Unionist-dominated Lords and two successive kings who intervened on the Unionist side - Edward VII, who died in May 1910, and his successor George V. According to the leading constitutional lawyer (and, at this time, by his own description, 'fanatical' Unionist) A. V. Dicey, Parliament 'in the mouth of a lawyer' comprised three houses: monarch, Lords, and Commons. Parliament was sovereign, and no body on earth could override it. But what if there was a deadlock between the elected house and the two unelected ones? Dicey and the equally eminent Sir William Anson weighed in with all their academic authority on the side of the two unelected houses. They contributed materially to the coup d'état.

The pattern was set early in the Parliament of 1906. The Lords did not obstruct some radical legislation. Most notably, they did not block the revolutionary Trade Disputes Act 1906, a Labour bill which fundamentally altered the balance between labour and capital by giving trade unions exemption from tort actions against them. However, they blocked multiple measures associated with the 'old Liberalism' of land reform, temperance and chapel. These included Education, Plural Voting, and Licensing bills. The Liberal government knew that there was no point, except a rhetorical one, in even introducing disestablishment of the Anglican church in Wales, which a majority of Welsh MPs had demanded since popular suffrage in Wales began in 1868. It would have been (and later was, in 1912, 1913, and 1914) thrown out by a huge Lords majority including at least 15 Church of England bishops. For different reasons, they did not press Irish Home Rule, the platform of the Irish Party. They were aware that anti-Irish and anti-Catholic opinion still affected their target voters. They had a Commons majority without the Irish Party. So there was neither need to promote, nor point in promoting, legislation on Ireland that would also have been rejected by a huge Lords majority, as had the previous Home Rule bill of 1893.

Liberal ministers became more and more frustrated. They also faced a crisis of public finance from 1907 onwards. Tax receipts dropped with a cyclical depression; and two big expenditure increases were needed, one to pay for an accelerated programme of battleship construction ('We want eight, and we won't wait' demanded the Unionists) and the other to pay for the first old age pensions, introduced in the 1908 Budget.

The 1909 Budget was discussed in the Cabinet for a long time. Before it even got there, the Permanent Secretary to the Treasury, Sir George Murray, was denouncing Chancellor of the Exchequer David Lloyd George. In December 1908, Murray wrote, on Treasury notepaper, to ex-Liberal and ex-Prime Minister Lord Rosebery to say 'I cannot believe that your House will swallow the Budget if the mature infant turns out to be anything like the embryo which I now contemplate daily with horror'. Rosebery was by then a cross-bench peer. The Permanent Secretary was urging the House of Lords to reject his Chancellor's budget.

The 1909 budget

Lloyd George was thus thrown on more sympathetic officials while drafting his budget. The 1909 budget proposed to close the gap between tax and spending by three main measures. One was to make income tax more progressive on high incomes (known then as 'supertax'). A second was an increase in alcohol duties. The third, and smallest in expected yield, was a series of land taxes. Rich people did not like the first. The Irish Party did not like the second. But it was the land taxes that provoked the fury of the Lords.

Lloyd George made his strategy clear in a Cabinet paper of March 1909. His medium-term objective was a register of land values. But a separate Valuation Bill would have been defeated in the Lords. Therefore he had to attach his valuation proposals to the budget. However, unless he also included a projected revenue from the new taxes, however trivial, the Clerk of the House of Commons would tell the Speaker that the valuation proposals were 'outside the proper limits of a finance Bill'. So the Lords were perhaps right, in pursuit of the class interests of land, to attack the budget so furiously.

Most evidence suggests that Lloyd George and the other Cabinet radical, Winston Churchill, did not initially set out to provoke the Lords. But when the Duke of Buccleuch refused to pay a guinea subscription to his local football club on the grounds of the swingeing impact of land tax, Lloyd George saw his opportunity. He now set out to goad the Lords into the unprecedented step of rejecting the budget - something which was previously thought to be an intolerable breach of the Commons monopoly of supply which (it was thought) the English Civil War had established. At Newcastle-upon-Tyne, on October 10 1909, Lloyd George said:

The question will be asked 'should 500 men, ordinary men chosen accidentally from among the unemployed, override the judgment - the deliberate judgment - of millions of people who are engaged in the industry which makes the wealth of the country?' That is one question. Another will be, who ordained that a few should have the land of Britain as a perquisite; who made 10,000 people owners of the soil, and the rest of us trespassers in the land of our birth...?

The Lords rejected the budget on 30 November 1909, by 350 votes to 75. This forced an immediate General Election in January 1910, where otherwise the Liberals would not have had to dissolve until 1912. During the campaign, Prime Minister H. H. Asquith said that the Liberals would 'not assume office ... unless we can secure the safeguards which experience shows us to be necessary'. Commentators assumed that this meant that Edward VII had promised Asquith that, if the Liberals and allies won, he would be willing to create enough peers to force Lords reform through the House of Lords.

He had not. The election result produced a second victory for the 'progressive alliance', but now the Irish Party held the balance of power. It could force Home Rule on to the Commons agenda. But Home Rule would depend on overcoming the Lords' veto. Edward's secretary told Asquith's that 'The King regards the policy of the Government as tantamount to the destruction of the House of Lords' and therefore he was not prepared to create peers until after a second general election. If the Unionists had been elected in 1906, they could have got their programme through Lords and monarch unimpeded (as in the Parliaments of 1886, 1895, and 1900). The Liberals and allies needed to win three times in a row.

They did. The death of Edward brought the more uncompromising Unionist George V to the throne. The politicians spent the summer of 1910 trying to secure a Unionist-Liberal deal that would have isolated the extremists - the Irish Party, the Labour Party, and perhaps the increasingly militant Ulster unionists. They failed. Asquith turned to the new king for a promise that, if the Liberals and allies won a third time, he would create the necessary peers. One of his secretaries advised him to refuse. This would have put the minority Unionist leader Balfour into office, and would have been disastrous for the monarchy. By dint of creative deception, the king's other secretary saved the monarchy by steering George away from this into an extremely grumpy agreement to create peers if the Liberals won the third election.

King, Lords, and people: the second phase

They did, in December 1910. Once again the Irish Party was pivotal, and was in a position to force Home Rule through. To get it, they first had to cooperate with the Liberals in enacting Lords reform. The result of the Parliament Bill was in doubt until the last vote in the Lords, on 10 August 1911, when the few Liberals and some bishops joined Unionist 'hedgers' to outvote the 'ditchers' (as in 'die in the last') by 131 to 114.

The Parliament Act 1911 restricted the Lords' ability to veto Commons bills by a provision whose dire effect was presumably unappreciated by its drafters. To be passed without Lords' consent, a Commons bill must be presented unaltered in three successive sessions. As everybody knew that Home Rule was next on the agenda, this implied that the Liberals must get it right the first time it was presented, in 1912. We now all know, with the infinite wisdom of hindsight, that the bill should have allowed an opt-out to the most heavily Protestant parts of Ulster, where politicians and (Protestant) people violently objected to Home Rule. It would have been administratively difficult and would have involved defying the pivotal Irish Party, but recognising the realpolitik that they had nowhere else to go. It was not done. So the Ulster Protestants had 2½ years to plan their paramilitary resistance. This culminated in the spring of 1914 with the two events that made up the Unionists' coup d'état against the elected government: the Curragh mutiny and the Larne gunrunning.

In March 1914 the Secretary for War decided that troops stationed in Ireland should be ready to go to the aid of the civil power in order to protect arms dumps in Protestant territory from possible raids by the Ulster Volunteer Force. This was not an unreasonable request. A previous attempt by a Unionist MP to arm the paramilitaries had been broken up by the police. One of the most ardent Unionists, Henry Wilson, Director of Military Operations at the War Office, was in fact advising the Ulster Protestants rather than the government he served. On March 20, about 60 cavalry officers at the Curragh, Co. Kildare, said they would resign their commissions rather than carry out this order. Advised daily by Wilson, with other Unionist cheerleaders including the party leader Andrew Bonar Law and the Boer War hero Field-Marshal Lord Roberts (who authorised a letter to go out in his name encouraging soldiers to disobey orders), the contingent mutineers took their argument to London and won. The Secretary for War promised that no soldiers would be asked to enforce the Home Rule Bill in Ulster.

Meanwhile, a pirate captain was on the high seas. Major F. H. Crawford had resigned from the army to become the paramilitaries' Director of Ordnance. With the 'very large cheque' that his 1915 memoir hints may have been supplied by Walter Long or Bonar Law, he went to Hamburg cash in hand to buy 30,000 rifles, three million ammunition rounds, and a ship to carry them in. After eloping from Danish customs, changing the name of the ship, and transferring the cargo to a second ship as the two steamed up the Irish Channel without lights, Crawford landed the munitions at Larne, Co. Antrim, on the night of 24/25 April 1914. Militarily, the operation was a brilliant success. The paramilitaries completely excluded the police, Customs, and the army from Larne, while sending a dummy decoy ship to Belfast to attract Customs' attention. From that point on the threat of civil war was no longer a bluff. The Government of Ireland bill passed three times by the elected house of parliament was unworkable. When the Irish civil war was pre-empted by the outbreak of the First World War, Home Rule was put into cold storage. When revived after the war it was too late. The Irish Party had been cut down by its failure to achieve Home Rule, to be replaced by Sinn Fein, whose guerrilla war of 1920-21 secured independence for the Irish Free State, leaving the six counties of Northern Ireland in the United Kingdom with a large and potentially mutinous Catholic minority. The rest is (also) history.

The destruction of the unwritten constitution

These events are so familiar to historians of the period that it is easy to overlook their enormity. In 1909 the House of Lords voted, by a huge majority, to overturn the Commons monopoly of supply that had remained unchallenged since the 17th century. Two successive kings vetoed the proposals of their Liberal governments, which had to be elected three times in a row in order to carry out their programme. The Curragh officers dictated terms to the elected government, restricting its right to send troops to the aid of the civil power. The Larne gunrunners defied Danish and UK law to import German rifles and ammunition to Ulster. The gun-running may have been financed by the Leader of His Majesty's Loyal Opposition, who had said at Blenheim Palace in July 1912, 'I can imagine no length of resistance to which Ulster can go in which I would not be prepared to support them'. Crawford wrote in his 1915 'Diary of the Gunrunning' that on 27 March 1914 he had

arrived in London. Called and saw [Unionist frontbencher] Walter Long MP. He sent his secretary to see Bonar Law. The latter when introduced to me said, with a twinkle in his eye, 'I have heard of you before, Mr Crawford'. I had a private letter from the Chief [Sir Edward Carson], whom I left in Belfast, to him. I had to see WL [Walter Long] about the finances of the business, and make my final arrangements for paying [a] very large cheque

Even if Crawford's claims be dismissed as fantasy, the role of other Unionist financiers, including Lord Milner and Rudyard Kipling, is publicly admitted - even celebrated. How did so many Unionists persuade themselves that they had the right to stage a coup d'état against the elected government? And what does the story imply for constitutional theory?

We can start with the resolution by which the Lords voted down the 1909 budget: 'that this House is not justified in giving its assent to the Bill until it has been submitted to the judgment of the country'. The Unionists were so angry that they were prepared to drop parliamentary sovereignty right at the start of the constitutional conflict. From 1909 to 1914 they were confident that they, and not the elected government, represented the will of the people. After the first 1910 election, that story fell in relation to the budget. One might have thought that if any election ever determines the will of the people, then three victories in a row for one side, two of them at elections forced by the vetoes of the two unelected chambers, would settle the matter. But the Unionist vetoes multiplied once the conflict had entered its second phase.

Chance took a hand in the unexpected election of Bonar Law as Unionist leader in 1911. He came through the middle when two better-known candidates were deadlocked. A Scots-Irish-Canadian from a Presbyterian background, he was the first non-Anglican (excluding Disraeli) to lead the Conservatives, and the first to have gut sympathy with Ulster Protestants. Already in July 1912 he stated that there were 'no lengths' to which they might not go in which he would not support them. As they were already raising a paramilitary force, these were weighty words.

Before Curragh and Larne, Unionists cast around for any argument that might stop Home Rule in its tracks. Concentrating only on the constitutional lawyers, we find Dicey, in a book published in 1913, extolling 'the old Whig doctrine that oppression, and especially resistance to the will of the nation, might justify what was technically conspiracy or rebellion.... What are the limits within which the tyranny either of a king or of a democracy justifies civil war is not an inquiry on which I will enter'. After Curragh, Sir William Anson, Warden of All Souls College, Oxford, wrote to the Times to say of the Ulster Protestants, 'I for one believe, with a conviction which no results of a Referendum or a General Election can alter, that they are justified in their resistance'. At the time, Anson was the constitutional law tutor of the Prince of Wales (later Edward VIII).

Thus Dicey believed that the will of the people was with the paramilitaries. He offered no evidence for this. Anson believed that they were right to fight even if the will of the people was not with them. These were the two leading constitutional lawyers of their day. The concept of parliamentary sovereignty, which lawyers have for 120 years studied in the pages of Dicey's textbooks, was torn down by the same A. V. Dicey in his polemical publications. It is impossible to defend him on the ground that the first describe a formal position and the second outline his political position. For his political position was inconsistent with any normative belief in parliamentary sovereignty.

Why were the Unionists so sure that the will of the people was on their side, despite their loss of three consecutive General Elections (the second and third forced by Unionist vetoes)? They were caught in two contradictory beliefs: one, that Ireland must remain for ever part of the UK; two, that when the will of the people was counted, the will of the Irish people was not to count. Or, at least, the will of Irish nationalist people was not to count.


Given the intellectual vacuity of parliamentary sovereignty as a normative position, the way forward is to revive an idea that the English Levellers put forward in 1647, and the framers of the US Constitution put forward in 1787: 'We the People'. The people are ultimately sovereign. Parliament's moral authority can only derive from the fact that it is elected. However, as Dicey said, 'Parliament means, in the mouth of a lawyer ..., the King, the House of Lords, and the House of Commons'. Of these three chambers only one is elected. In order to embody the sovereignty of the people, or even to reconstruct Parliamentary sovereignty on to morally defensible grounds, it is necessary for the other two chambers to be elected. Otherwise, the risk remains, however remote, of a constitutional crisis as severe as that of 1914.

The Lords in 1909, and their apologists such as Dicey, complained that the Commons had become an elective dictatorship. Many may argue that the issue to be addressed today is the untrammelled power of the Commons, which in practice means the untrammelled power of the government of the day. There need to be some checks and balances on that power. But the crisis of 1909-14 shows that an unelected Lords and unelected monarch cannot represent 'us, the people'. An elected replacement for the Lords would of course have to be elected on a different basis and for different terms to the Commons. The best idea around was put into circulation by the Conservatives' Mackay Commission in 1999. The Lords should be elected from large, multi-member districts - possibly the UK's standard regions, which also serve as European Parliament constituencies. They would serve for one long, non-renewable, fixed term: say of 15 years, or of three Parliaments. And nobody would be eligible to move immediately from either house to the other. The elected Lords would still be party nominees; but these changes would ensure that they behaved differently to MPs. In a little-noticed Commons statement in July 2009, Jack Straw signalled that the Labour government supported a plan of this sort, which, he said, would guarantee that at any time the Commons' mandate was more recent than the Upper House's. In the background papers for the draft Lords Reform Bill in 2009 Queen's Speech, the Government again signalled support for this. Given that all three main British parties are committed to an elected Upper House, this is how the next government, of any party, could bring it about.

What about Dicey's third chamber, the monarchy? In 1914 the UK had a monarch of strong personal opinions, which happened to be conservative. The UK needs a head of state for the very occasional crisis, but perhaps the people should have some choice in how conservative or how liberal their head of state should be:

ARTHUR: I am your king!

OLD WOMAN: Well, I didn't vote for you.

ARTHUR: You don't vote for kings.

OLD WOMAN: Well, how did you become king, then?

ARTHUR: The Lady of the Lake, her arm clad in the purest shimmering samite, held Excalibur aloft from the bosom of the water to signify by Divine Providence ... that I, Arthur, was to carry Excalibur ... That is why I am your king!

(from screenplay of Monty Python and the Holy Grail, 1974)

Further Reading

Dicey, A. V. (1913), A Fool's Paradise: being a constitutionalist's criticism on the Home Rule Bill of 1912. London: John Murray.

Dicey, A. V. (1915), Introduction to the Study of the Law of the Constitution. 8th edn, Reissued Indianapolis: Liberty Classics, 1982.

Jackson, Alvin (2003), Home Rule: an Irish history 1800-2000. London: Weidenfeld & Nicolson.

Jenkins, Roy (1968), Mr Balfour's Poodle. 2nd edn, London: Collins.

Mackay of Clashfern, Lord (chairman) (1999), Report of the Constitutional Commission. London: Mackay Commission.

O'Donnell, Gus (2005), 'The relationship between economy and state' in Changing Times: leading perspectives on the Civil Service in the 21st century and its enduring values. London: Office of the Civil Service Commissioners.

Stewart, A. T. Q. (1967), The Ulster Crisis. London: Faber & Faber.

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