Because of the increased revenues from the new tax, Peel was able to put further economic policy in place, which would also prove to have an effect on both the English social situation and his political reputation. Over the next few months, Peel was able to substantially reduce tariffs on about 750 consumer goods, thereby making items more affordable for the working classes. This made his appeal in that area more apparent. It appeased the working classes, and it was politically well judged – at the time, the Chartist movement was causing significant disturbances. The wide-ranging plug riots in 1842 were a source of particular concern, and it is not surprising that the higher social classes would rather face a slight raise in taxes than risk further disruption. All of these aspects contributed towards making the income tax seem more acceptable.
Peel’s lowering of tariffs was complemented by the sliding scale of duties on items such as wheat and cereal. These were calculated so as to leave some protection for English farmers, yet also lead to a slight lowering in prices for the poor. This was one of the more controversial proposals-it eventually lead to the resignation of the Duke of Buckingham, a supporter of the Conservative party, who believed that the degree of protection that was left was not sufficient. However, the rest of the party were reasonably thoroughly won over by Peel and the measure was the first significant one to be introduced to the new Parliament in February 1842, with the only real opposition being from a group of Tory agriculturalists. Peel’s policy initiated a moderate programme of free trade, which, as far as he was concerned, was the way forward for England. It can be seen as a continuation of the liberalisation of trade policies developed by Robinson and Huskisson in the 1820s, although with a more determined approach. Peel’s 1842 Budget also bore remarkable similarities to Baring’s budget of 1841, which Peel tore apart in the House of Commons. Therefore, although we can consider that although his budget was reasonably successful, as it yielded a £4 million surplus by 1844, it was not necessarily all his own doing.
Peel introduced further economic policies in the form of the Bank Charter Act and The Companies Act in 1844. Peel considered it important to keep to the Gold Standard, and placed a number of restrictions on the issuing of bank notes; previously banks had all been able to print their own notes. Peel did not want to be seen as interfering with the currency and made it clear that his aim was “to inspire just confidence in the medium of exchange”. This was incredibly significant: so much so, that it was the basis of British currency control until the First World War. Peel’s Companies Act is a further significant piece of legislation. It aimed to encourage investment by making companies more transparent, and was important in the development of capitalism. It too has survived for a very long period of time, and is still used, showing the considerable impact that it had.
Peel’s 1845 Budget further reduced tariffs, moving Britain towards the free trading system that Peel believed to be the ideal. It was described by Norman Gash as “a masterpiece of administrative planning”; the income tax was renewed for a further 3 years, raising a surplus of over £5 million, giving the opportunity for agricultural protection to be further reduced, and eventually removed altogether with the repeal of the Corn Laws in 1846. This made food and other commodities more affordable for the poorer in society, and helped to bring down the cost of living. Peel very much believed that in order to deal with the ‘social question’, the government’s responsibility was to create economic conditions which would encourage growth and employment, and as such his social policies were very narrow. He believed that any further intervention would be counter-productive, and as such mainly supported previous initiatives, for example the Whigs’ 1834 Poor Law Amendment Act.
Overall, the evidence suggests that although Peel’s policies were very successful, they can be considered more of a stimulus rather than primary cause of the improvement in the economy. Although he was able to bring the country out of recession quickly, it is in the natural cycle of the economy to have peaks and troughs, and these do not necessarily due to government policy. Peel’s free trade principles placed Britain at the centre of the developed world at the time, and Britain enjoyed considerable prosperity, but long-term this market did not work and Britain had to reintroduce protection. Therefore, we can consider that in the short-term, his policies were reasonably successful, but they had unforeseen long-term effects which, with benefit of hindsight, make them seem less positive.