Asquith (29 page)

Asquith introduced three budgets—two of them during his time at the Exchequer and the third several weeks after his accession to the premiership; as he had prepared these last proposals it was thought appropriate that he should present them, although the new Chancellor was left to conduct the Finance Bill. Of these three budgets, the first (as Asquith himself recognised, and thought inevitable because of the short time available for preparation) was uninteresting, the second made an important break of new fiscal ground, and the third laid the first brick of the welfare state. They were all presented in a form suitable to a Chancellor “ supposed ... to be a financier of a respectable and more or less conservative type ” (as Asquith could later describe himself
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), but they were highly successful in achieving the maximum of radical result while arousing the minimum of conservative opposition.

The fiscal adventurousness of the second budget lay in the introduction, for the first time, of a differentiation between the rates of tax on earned and unearned income. Asquith records that he had wished to do this in his first budget, but was prevented by Treasury opposition. “ I was at once met with the objection, which was considered fatal, that Gladstone had always declared that any such scheme was impracticable.”
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He decided to try and outflank this opposition by the appointment of an all-party Select Committee, and chose Sir Charles Dilke, the erudite and determinedly radical member for the Forest of Dean, as a chairman likely to produce a favourable report. Ironically Dilke, who had become old and arid with disappointment, opposed the recommendation,
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but was unable to make his views prevail against the rest of the Committee.

¹
_{He wanted an entirely separate system of property taxation, as in Prussia and Holland.}

Fortified by this report (which also contained a super-tax recommendation which Lloyd George was to implement in 1909) Asquith then felt able to defy the mandarins of the Treasury, and to make differentiation the centre-piece of his budget of 1907. The rate of tax was then 1/- in the £. For earned incomes up to £2,000, provided also that the taxpayer’s total income, earned and unearned, did not exceed this sum, the rate was reduced to 9d. Although the form in which it is expressed has changed, the taxation system has never since been without this differentiation.

The speech in which this and other changes were proposed took just over two hours and was accounted a masterly performance. Haldane thought it ranked with “ the great performances of the great Chancellors,” and Sir George Murray said that it rose “ in some places to levels which nobody in our time except Mr. Gladstone has ever reached.” Mrs. Asquith made a more original and illuminating comment. “ No one speaks quite like Henry,” she wrote in her diary. “ He seems to run rather a bigger show; he can keep to the ground, cut into it or leave it without ever being ridiculous, boring, or wanting in taste, and he is never too long. He gives a feeling of power more than of grace or charm . . .”
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One of the most notable passages in the speech was a classical statement of the case that the taxable capacity of a man with an income from property is necessarily greater than that of a man with the same income from work.

The budget of 1907 also paved the way for the principal social reform of 1908—the cautious beginning of old age pensions. Asquith put aside part of his modest surplus of £4111. to help provide for this, and announced firmly what he was doing. The idea of making some national provision for the old was one which occupied his mind throughout the period of his Chancellorship. The fact that, even by his own austere financial standards, it was possible to do this in 1908 was probably the main reason why, as Prime Minister, he exercised the prerogative of introducing’ the budget of that year. The terms in which he did so were typically non-emotional. There were no references to the secure and contented evening of life which he was promoting for an indefinite series of idealised old couples. His approach was severely practical. There was to be a non-contributory pension of 5s. a week at seventy for those whose total income did not exceed 10s. a week, and who had not disqualified themselves by
being criminals or lunatics or (within the previous year) paupers; married couples were to receive 8s. 9d.

To modern ears the scheme sounds cautious and meagre. But it was violently criticised at the time for showing a reckless generosity. Rosebery, any trace of radicalism now far behind him, thought the plan “ so prodigal of expenditure as likely to undermine the whole fabric of the Empire and another peer described it as “ destructive of all thrift.” Equally, some of Asquith’s own supporters expressed disappointment with the extent of the advance. £13 a year for a rigidly circumscribed half million of the aged poor was hardly the beginning of a social millenium. But it was the most important piece of social legislation for several decades past, and it brought England more or less into line with Germany, Denmark and New Zealand, the coimtries which had hitherto led the way in this field.

Asquith’s other principal Treasury task was the scrutiny of the estimates of the other departments. Although he was a careful financier—and succeeded in 1907-8 in making an unprecedently large provision for the redemption of debt—he was not a fanatical economist. Sometimes, in accordance with the custom of the time, he concerned himself with incredibly small items of expenditure, but he did not do so in a particularly cheeseparing way. “ I think we might well arrange to provide Bryce with an extra allowance for outfit,” he wrote to the Prime Minister at the time of the former Chief Secretary’s appointment to the Washington Embassy, “ and to make up the month’s loss of salary.
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The crucial expenditure questions, as usual, related to the armed services. Here Asquith was greatly helped by Haldane, whose War Office administration was as economical as it was efficient. His estimates for the year 1907-8 showed an unrequested saving of £2m. But the demands of the Admiralty, a constantly recurring source of dissension within this pre-1914 Liberal Government, were already causing trouble.

Asquith’s position on this issue was a little ambiguous. On the one hand he was a Liberal Chancellor of the Exchequer, the inheritor of the retrenchment traditions of Gladstone and Harcourt. On the other, he was the leader, within the Government, of the group which believed in a strong Britain. Sometimes he sought to compromise his two responsibilities by seeing proposed expenditure as militarily unnecessary. Thus, on December 30th 1906, he wrote to Campbell-
Bannerman: “I am much disquieted by Tweedmouth’s memorandum on Navy Estimates... . The enclosed article from today’s
Spectator
— which is not in any sense pre-disposed to economy in these matters— suggests that we are going ahead in the matter of construction far beyond any real necessity
.”
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The irony of an “ Imperialist ” Chancellor writing in these terms to a “ Little Englander ” Prime Minister cannot be escaped; but Asquith never pushed his opposition to the estimates to the extent which Gladstone and Harcourt would have considered necessary, and which Lloyd George was to attempt in the future. As a result questions of naval construction led only to a growling dispute under his Chancellorship and not to open crisis as was later the case.

Another of Asquith’s responsibilities—semi-departmental this time perhaps—was to be the chief keeper of the free trade shrine. For a time after the crushing victory of 1906 there was little attempt to invade it. But in the spring of 1907 a conference of dominion Prime Ministers assembled in London and the majority of those who came used public as well as private pressure to urge imperial preference on the British Government. Deakin and Lyne of Australia, and Jameson and Smartt of Cape Colony were particularly active, not only in argument with Asquith and with Churchill (his chief assistant on this matter) at the sessions of the Conference, but also at meetings and banquets outside, many of them organised under opposition auspices. These activities had no effect on the Government’s policy—Churchill had declared at an early stage and in characteristic terms that the door to a preferential system had been “ banged, bolted, and barred ” by the election result—but they naturally produced some resentment amongst ministers. Campbell-Bannerman, tactfully purporting to blame the “ imperialists ” at home rather than the dominion Prime Ministers, delivered a sharp retort on May 10th: “ They hold us up to obloquy as indifferent to the cause of the Empire when all we do is to claim for ourselves the same freedom which these self-governing Colonies and communities enjoy, and which nothing on earth can tempt them to forgo.”
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It was noticeable that Sir Wilfrid Laurier of Canada, the most experienced of the dominion leaders, and General Botha of the Transvaal, perhaps the wisest amongst them, held themselves aloof from the pressure of their colleagues. Laurier was as interested in imperial preference as anyone, but both he and Botha subordinated it
to the absolute right of any member of the British family of nations, including the mother country, to be mistress of her own trading policies. To balance their stubbornness on the fiscal issue the Liberal Government had the great advantage, in the eyes of most of the colonial leaders, of the rapid advance towards full self-determination which they were making in South Africa.

The dominant issue in the life of the Government was not of direct Treasury concern: it was the lack of progress of the general legislative programme. When the new Parliament met, the huge Liberal majority in the House of Commons was confronted by an almost equally large Unionist one in the House of Lords. It quickly became clear that the opposition leaders in both Houses were prepared to accord no real primacy to the elected chamber. Occasionally Balfour and Lansdowne instructed the peers to make a tactical show of restraint. More frequently they suppressed their delicate susceptibilities and encouraged a slaughter of Liberal bills on a scale from which their more robust predecessors, the Duke of Wellington or Sir Robert Peel, would have recoiled in horror.

The first victim was the Education Bill. This bill was designed to remedy some of the more keenly-felt grievances of the Nonconformists, while leaving intact the 1902 administrative structure. It was introduced into the House of Commons by Augustine Birrell on April 9th, 1906, and immediately produced a storm of controversy. This came not only from the Unionist Party, but also from the Roman and Anglican churches. It was controversy along well-worn lines. The liturgists had had their way in 1902. The free churches had responded by rallying to the Liberal Party and ensuring that education was one of the two or three central issues of the electoral battle. This rallying of Nonconformists had helped to produce the great radical majority, and they could lay a strong claim to priority of relief. But the peers completely declined to recognise the force and freshness of the mandate behind the measure. When the bill reached them in the autumn, after a strenuous passage through the House of Commons, they treated it exactly in accordance with the instructions they were given by Balfour. They let it through on second reading, and then proceeded so to amend it in committee as not merely to destroy but to reverse its original purpose. In the form in which it returned to the Commons, the bill would have given the upholders of denominational teaching a still more favourable position than they enjoyed under the 1902 Act.

There followed a period of skirmishing between the two Houses. The King tried unsuccessfully to promote a compromise and achieved only an abortive conference between three representatives of the Government, headed by Asquith, three of the opposition, and the Archbishop of Canterbury. By the middle of December it was obvious that complete deadlock had been reached. The Government, full of growls against the enormity of the peers’ behaviour, had no option but to abandon the bill.