The People's Budget precipitated the constitutional crisis, which ended two years later in the 1911 Parliament Act, which curtailed the Lords' veto. How far it was deliberately contrived to provoke a clash with the Lords remains a matter of some controversy. Malcolm Thomson, the official biographer of Lloyd George, claims that Lloyd George, with Asquith's approval, intentionally drafted his Budget so as to court its rejection by the peers. This would appear to be in accordance with the Chancellor's increasing resentment at the irresponsible conduct of the Lords and with his strong desire to reduce their powers. However, others feel that it never seriously occurred to the Government that the Lords would dare to challenge the Commons' supremacy in financial matters by attacking a Finance Bill. They argue that a controversial Budget was the Liberals' alternative to limiting the power of the House of Lords and that the clash with the Upper House, rather than being planned, grew out of the course of events. Once the peers had been unwise enough to reject the Budget, the Liberals took the favourable opportunity of fighting them. It is also true to say that the Liberals made many efforts to avoid conflict during the crisis. The Liberals were just as averse to the creation of new peers as the Conservatives were and they gave the Lords every opportunity to pass first the Budget and later the Parliament Act.
A concurrent problem with that of political conflict was that of industrial unrest. On the very day that George V gave his approval to the new Parliament Act, 18 August 1911, the country was faced with its first national railway strike, an indication of the new spirit of 'labour unrest' and trade union resurgence, which seemed to characterize the four years preceding the First World War. Labour unrest was marked by major industrial disputes between 1910 and 1912 on the railways and in the mines and docks over pay, conditions, and (for the railwaymen and Dockers) union recognition. When disputes began to move into the work areas of other industries as well, the public became alarmed not only by the extent of strike action but also, in the words of a recent historian, by its 'violent, unofficial and insurgent character'.
It would appear that the fundamental causes for such unrest were economic. The cost of living had risen by some four or five per cent between 1902 and 1908, and by a further eight points between 1909 and 1913. The rise in money wages had kept pace between 1902 and 1908, but had lagged behind between 1909 and 1913. Thus the pressure on trade unions to seek wage increases was correspondingly greater. Moreover, the rise in the cost of living did not hit all the workers in the same way. Those who were better off were better able to survive a fall in the relative value of wages than the manual worker, for whose labour there was no steady demand and whose wages therefore rose and fell more irregularly.
The great obstacle of the House of Lords having been removed, although unrest in industry still awkward, the Liberal government could now once more address the complex issue of Irish Home Rule. To that extent the Liberal government of 1912 enjoyed an enormous advantage over the Liberal government of 1893. But it also had great disadvantages. In the first place, it did not have the commanding leadership of Gladstone, although Asquith was a Home Ruler in much the same spirit that Sir William Harcourt had been. It was preferable, marginally, to force, and it fairly reflected the balance of what could be reasonably demanded on the one side and reasonably conceded on the other. Asquith could not, on this issue, offer inspiring leadership and for this reason he himself must take much of the responsibility for the conflict that followed and the fact that had World War II not broken out, civil war may well have done. However, the cause of conflict cannot be attributed only to Asquith's poor handling of events and many would argue that the Conservatives did much to antagonise matters. Indeed the attitude of the Conservatives in threatening to give all-out support to Ulster's defiance of Home Rule received even harsher criticism than their earlier policy of using the House of Lords to destroy the budget of 1909, but this view is often difficult to sustain. To even moderate Unionists it seemed that the Liberals had used Irish votes, in any case grossly over represented, to tamper with the constitution by passing the Parliament Act and were then forced to honour their part of a corrupt bargain by instigating Home Rule, an old and destructive policy, which had never been approved by the British electorate. This policy meant coercing a quarter of the population of the island of Ireland into giving up their British allegiance, a procedure that was clearly unrealistic. In these circumstances, so most Unionists felt, they could only back up Ulster's resistance. The relentless passion with which the Unionists opposed Home Rule owed something to the fact that they hoped thereby to erase the humiliation suffered over the Lords' veto and to avoid a fourth successive general election defeat; also to the continuing difficulties in the party over tariff reform and the failure of any other coherent policies to emerge for the social and economic tensions of the period.
Much of the blame for this bitter social and political conflict must surely lie with the Liberal Party. In their handling of the Irish Question in these years they had committed many fundamental errors. Having first imposed an undemocratic solution, which was intolerable to the people of Ulster, they then expected the Protestant minority in Ireland to behave in the best traditions of British liberalism by passively accepting the decisions of the majority. They appeared to be applying British remedies to an Irish problem. Ireland has had no opportunity for the democratic traditions of peaceful change to grow - of minimal violence and of the minority accepting the decisions of the majority. Bitter racial and religious conflict, fear and suspicion made the Protestant people of Ulster unwilling to accept the rule of their hated enemies: the Catholics of the South. It was the Liberals' tragedy that they had failed to assess the true nature of Ulster's misgivings; that their negligence had made the situation there more impossible; and that a democratic solution to the Ulster problem was now out of the question.
Although all these predicaments could have perhaps been avoided, unless dealt with more effectively in previous years, it is undeniable that in most cases the Liberals could have been more effective in their handling of the situation. There is often a feeling that this is the case with the power struggle between the state and the House of Lords. However, this is the case where unsuccessful dealings are most likely, as two completely different groups of people, with opposite views on how the nation should be run and situations handled, are unlikely to agree without disputes and long, drawn-out arguments.
With such strong conflicting views neither group would want to give in to the other, thus admitting defeat, leading to a period of arguments, manipulation and compromising. I feel that it was always going to be difficult for the Liberals to obtain their aim, therefore for them to succeed shows success in the dealings with the crisis. Exactly how successful they were in achieving their goal is difficult to analysis, as all that is available for research is the results of their dealings. These show a success for the Liberal Party, meaning that, from their point of view, their dealings with the House of Lords were successful.