In June 1914 David Lloyd George, Liberal Chancellor of the Exchequer, capitulated to opposition from within his own party and withdrew from the Budget for 1914–15 his proposals to revise the system of Exchequer grants to local authorities and to establish land value rating. Withdrawal was a considerable political humiliation for Lloyd George. “His stock stands low in the party,” commented his friend, Lord Riddell, in his diary. “The Budget has been a fiasco.” What went wrong with the 1914 Budget is the concern of this article.
Lloyd George's 1914 Budget incorporated two distinct strategies. The first comprised a fiscal strategy designed to provide in a single “taxing” Budget for the needs of both the Navy and the reorganization of local government finance and taxation. The second constituted part of a wider political strategy intended to furnish a reform program that would enable the Liberals to make a powerful progressive appeal at the next general election, due by the end of 1915. The first was supposed to serve the second, but in the event had the opposite result. It prompted Lloyd George to abandon his original plan of building up to a major reform Budget in 1915 and to proceed instead to include in the 1914 Budget “provisional” grants to local authorities before he had prepared the groundwork, administratively, legislatively or politically, for a new system of grants and rating. At all levels, the enterprise was premature, and simply presented a group of discontented wealthy Liberals in the Commons with the opportunity to stage an effective protest against the direction of Liberal finance.