The 1906 election made Liberal Henry Cambell-Bannerman Prime Minister, Asquith chanceler of the exchequer, and Lloyd-George president of the board of trade. Yet even with the overwelming majority in house of commons, the Liberal government was unable to introduce many of its new ideas or promices, due to the house of lords. Although Cambel-Bannerman did manage to introduce some new measures. the trades dispute act of 1906 reversed the Taff-Vale judgement, the workman compensation act made employers responsibe for injuries sustained at work, miners work hours were reduced, and 2 education acts provided meals and medical care within schools. The house of lords came into conflict with the liberal govenment alot during this period, mostly only passing popular laws, but stopping or changeing radical and social reform acts. In 1908 Cambell-Bannerman was replaced as Prime Minister by Asquith, but it was clear by this time that the conservative ploy was working, the liberals were losing by-elections to the unionists and the sitiuation with the house of lords was becoming disapring.
In 1909 the government needed more money, mainly to pay for social change. The unionists proposed the moeny be raised through tarrif reform rather than taxation, but the peoples budget of 1909 ignored this, increaced taxation of the wealthy and also proposed 'land tax' which was very unpopular with the unionist lords. The budget was the work of Lloyd-George, and he defended it in and out of parliament, giving a renoundspeech at the limehouse. To estimate public support for the new budget a by-election was fought by over the issue, which the liberals won. yet still, on the 30th of november 1909, the house of lords rejected the budget. Asquith attacked the house of lords, calling their rejection, 'a breech of the constitution and a usurpation or the rights of the commons'. The day after that speech Asquith went to the king and dissolved parliament, a general election was called for 1910. As Asquith put it, the house of lords 'was not the watchdog of the constitution, but mr Balfors poodle', this was a widefelt opinion, the house of lords had not rejected a budget in over 200 years, and was intended more as a revising chamber rather than the governing body.
It can be argued that the peoples budget was created by Lloyd-George with the intention of being rejected by the house of lords. Weather this is true or not, its rejection was the opportunity the chance the liberals had been waiting for to call an election over, Lloyd-Geroge is quoted as saying, 'their greed had overcome their craft, and we have got them'. despite Lloyd-Georges enthusiasm, in the 1910 election there was a great swing away from the liberals, they won by a very slim majority, but were able to goven properly thanks to the irish and labour support. the election was seen by the liberals as a great victory, and on April the 10th 1910 the tension between the 2 houses came to a head when Asquith introduced the parliament bill.
The parliament bill, amoungst other things, reccomended the house of lords have no power over budgets, the leangth of parliament be reduced from 7 years to 5, and most importantly, the house of lords have its power of veto removed, and replaced by a 2 year delaying power. Athough the lords had been expecting a proposal of reform following the liberal victory, they were outraged to see their power of veto removed, and every proposed comprimise by the house of lords involved retaining the power of veto. On the 28th of april the people budget was passed by the house of lords, but the power struggle between the houses comes to a tempoary stop when on may 6th king edward VII dies and is replaced by George V. By the 10th of November, Asquith belives it is clear that the lords are going to reject the parliament bill, he goes to the king and asks for parliament to be dissolved, George refuses to do so untill the bill is actually refused, on the 28th the lords reject the bill, and parliament is dissolved.
In the second 1910 election, fought over the parliament bill, the liberals were forced to create a coalition govenment having won exactly the same number of seats as the unionists, but they remained in power, and the election showed a majority support for the bill. in febuary 1911 the bill passed through the commons, by July 1911 it seemed clear that the lord would reject the bill again. Asquith went to the king and got Georges worth that the king would, upon rejection of the bill, create such a number of liberal peers that the bill would eventually have to pass through the lords. Faced with this prospect, the unionists gave in, and asked their lords to abstain from voting, ensuring a the liberal lords would vote the bill through.
It was not quite so simple though. Some unionist lords refused to follow Balfors request to abstain, so many lords joined the 'die hard revolt' that infact they outvoted the liberals. As a result a number of unionist lords were to their dismay, forced to vote for the bill in order for it to pass. In august 1911 it was signed by the king and became law.
During this period the house of lords power was abused, and as a result cut. perhaps the most important change made by the liberal government of the time.