The policy of Tariff Reform gave the Liberals yet another opportunity to show their unity in the face of a divided party in office. Conservative Chancellor of the Exchequer Joseph Chamberlain proposed a policy of ‘protectionism’ in 1903. He wished to establish tariffs that would raise the price of foreign imports, so people would buy the more economical ‘home grown’ alternatives. It was believed that an increase in demand would force employers to taken on more labour, which would result in unemployment levels falling. He wanted the generated revenues from such tariffs to finance welfare reforms such as pensions. However, in the mid-Victorian era free trade hade become to be seen as a moral principle, firmly linked with industrial success. The Conservatives split into moderates (calling for compromise), free traders and protectionists. The Liberals responded with a united front in defence of free trade (mentioned by ninety eight percent of Liberal candidates in their election speeches). Cleverly, the Liberals spin on protectionism was to portray the proposed tariffs as a ‘bread tax’ – if the price of imported grain increased, it would drive up the cost of bread and so living expenses would rise.
Moreover, the recently formed Labour Party made an electoral agreement with the Liberals; both parties agreed not to stand against each other and risk dividing the anti-Tory vote. However, it was not the promise of social reform that caused a Liberal victory. Campbell- Bannerman was reluctant to commit to old age pensions or unemployment reforms and a third of the Liberal candidates did not mention Poor Law reforms in their pre election speeches. In fact, most the most prominent aspects of the campaign were Chinese slavery and free trade. A higher turnout to vote in 1906 compared to 1900 also contributed to the Liberals entering office, and so having the opportunity to embark on revolutionary reforms.
Although the Liberal and Labour Parties had agreed to co-operate during the 1906 elections, Liberal MPs were increasingly aware of the voice the Labour Party had given to the working classes, and their commitment to ensuring social and welfare reforms. The Liberals had to show they would be just as effective at tackling the issues of poverty as the Labour Party if they wanted to prevent a socialist revolution and hold on to power. Only twenty-nine Labour MPs were elected in 1906, but the widely held Liberal view was that Labour had the potential to replace the Conservatives as the main party of opposition. Labour politicians were committed to a moderate programme of reform; but many politicians were concerned that if attempts were not made to mollify the working classes with improvement of their living and working conditions then a much more radical socialist uprising could occur.
The government wanted to emulate Bismarck’s Germany, and not risk making the mistakes that could force a revolution with consequences similar to those which occurred in France. Lloyd George visited Germany in 1908 to examine their welfare system, and how it limited the growth of the kind of socialism which could destabilise a capitalist nation. It was also important to the Liberals that they kept one step ahead of the Conservatives; the Liberals were determined to prove that welfare reforms could be financed by progressive taxation and that it was unnecessary to abolish free trade in favour of protectionism.
By the end of the 1800s, the efficiency of the general populous was questionable, and many people believed only government intervention and social reform could effectively tackle the problem. Foreign economies were thriving, and the British government was faced with the results of the studies conducted by Booth and Rowntree, which undeniably proved that the poverty and squalor of the working classes was often through no fault of their own, and government involvement on a national scale was needed if the issue was to be addressed. It was realised that if poverty were dealt with then the lowest classes of society would be better capable of making a positive contribution to the country. People were most alarmed at the fact that Britain’s military might may be damaged because those who volunteered to fight were deemed physically unfit for service. A government Inter-Departmental Committee on Physical Deterioration blamed the unhealthy state of children on parents providing less than adequate care. Industrialists were relying on skilled workers who needed to be content enough to work hard. The fight to improve national efficiency needed to be based on welfare reforms, and it also helped in the development of New Liberalism.
Radical or more modern liberals such as Churchill and Lloyd George were key figures in shaping Liberal reforms, and the emerging of New Liberalism, in contrast to the previous ‘Gladstonian Liberalism’. New Liberalism advocated increased taxation on the rich in order to finance welfare reforms that would aid the poor. This was a direct contrast with the laissez faire policies which stood for low taxation and minimal state involvement in private affairs. During the mid nineteenth century, Britain lost a lot of its economic surety, and the likelihood of continued prosperity seemed slim after the Boer War. This led many Liberals to question the effectiveness of the laissez faire approach. Also, in 1892-5 the Liberals departed from their historic stance on taxation, income tax was cut on moderate incomes, yet ‘death duties’ were put in place for large incomes. This was seen as a signal that there was justification in taxing ‘unproductive wealth’. Some liberals believed this was the taxation policy that should finance welfare reforms. Furthermore, social studies had conclusively proved that some citizens were so poor that self-help alone would never lift them above the poverty line. These findings were groundbreaking and politicians began to re-evaluate their stance on poverty. These factors, combined with the introduction of a socialist party to the political climate, caused New Liberalism to emerge and respond in a more dynamic way than old liberal values could have permitted.
Pilot schemes had shown that when amenities were placed in the hands of local authorities, they could be better run in a way that would service the community as a whole. The success of such things at a local level inspired politicians that state intervention on a national scale could be an effective way to avoid a socialist revolution, economic crisis or Britain being surpassed by its neighbours.
Philosopher TH Green introduced the ideas of positive and negative freedom, which formed groundwork for New Liberalism to be built on. Old Liberalism followed a policy of negative freedom; the state protecting individuals from outside threats so they may achieve personal happiness. Conversely, positive freedom was giving people the help they needed to find their own freedom; be that help be given by the community, state or a combination on the two.
New Liberalism also shifted its political focus from individualism to collectivism; more responsibility was being placed on the government and communities to take the necessary action required to improve the standard of living for all.
However, New Liberalism had a gradual impact on politics. The support for New Liberalism came mainly from the professional middle classes, and at the time of the election victory, very few Liberal MPs openly supported the new ideas. In 1908 the cabinet was not convinced by the new course of action. There were many tensions between ‘new’ and ‘old’ liberals; many were unsure if there were only strategical differences between the two groups, or if in fact they differed on basis of principle.
Yet the tide was starting to turn; by 1909 Lloyd George (who’s support of New Liberalism had previously been debatable, his views were greatly affected by his visit to Bismarck’s Germany and his investigations into the reforms that had been made there) and Herbert Samuel were tirelessly campaigning for government intervention to protect the people from the effects of sickness, old age or unemployment. Nevertheless the most innovative changes would not occur until Winston Churchill and David Lloyd George sat as members of Asquith’s cabinet.
By the early twentieth century, there was a growing awareness of different causes of poverty; unemployment, illness, disability or the death of a main wage earner being just a few. It was recognised that unemployment could, and was, forcing respectable and skilled workers into poverty; not just the casual labourers. The great depression of 1873-96 made it clear that the assumption that economic growth would lead to increased levels of employment was flawed. It was becoming clearer that if trade moved between booms and slumps, periodic mass unemployment would be an inevitability. The poor law could not assist people in this kind of crisis; workhouses could not accommodate the numbers of people who suffered through no fault of their own, that was not the purpose they had been designed to fulfil. Further reforms were needed.
In 1905 the Conservatives introduced the Unemployed Workmen Act allowing local committees to supply relief for the unemployed. Campbell Bannerman was vague in his promises to tackle unemployment, but it was clear that Liberal intervention on behalf of the unemployed would be integral to a successful period in office. Two years into the administration, unemployment had reached crisis point. Seven point two percent of the workforce was unemployed; Booth and Rowntree had both identified unemployment as being a main cause of poverty, and so the Liberals needed to act. Previously, those who couldn’t find work were deemed responsible for themselves, and the only help given was charity or the poor law. In 1908 William Beveridge joined the board of trade; he believed periods of unemployment were bound to occur in the capitalist system, and instead of being blamed, people needed help finding the work that was available. He also believed in the state providing work in times of great depression. As a result, the 1909 Labour Exchanges Act was passed; unemployed men were able to visit their local exchange and be advised on vacancies in their specific trade.
The poor law was no longer believed to be an efficient or effective way to tackle unemployment, and the Liberals looked for a way to provide maintenance for those out of work. A national unemployment insurance scheme was incorporated into the 1911 health insurance Act. It did not cover all trades; just those prone to seasonal work.
In the years 1906 – 1911, the Liberal party embarked on an extensive, but unplanned programme of social reform in response to the social climate of the times. The rise of socialism in the form of the labour party was believed to have the possibility of becoming a powerful force of opposition to the liberals, the economy was suffering and the nation as a whole was seen as inefficient, people were not fit for purpose and the levels of unemployment throughout the country were crippling. New Liberalism was a radical branch of the Liberal party that focused on ideals such as collectivism, positive freedom and state intervention, and believed them to be the most effective ways to tackle the issue of welfare and social reform. Although New Liberalism was not popular with Liberal party members at the time of the landslide victory, influential men such as Churchill and Lloyd George became pioneers in later years, and under Herbert Asquith (Prime Minister 1908-1916) a successful period of reform began.
