On the 150th anniversary of David Lloyd George’s birth, Kirsty Williams argues in favour of the People’s Budget, and Russell Deacon tells us why he remains a controversial figure

January 17th, 2013

We begin with Kirsty Williams’ article. Click here to skip to Russell Deacon. 

Today would be David Lloyd George’s 150th birthday. He is remembered for passing the People’s Budget and for leading the nation through the First World War. His legacy is sufficiently well-regarded that he regularly appears in the loftier heights of polls of greatest Prime Ministers. But as well as this, he is remembered in Wales for his commitment to devolution – through Cymru Fydd, through disestablishment of the Church in Wales and through the creation of national institutions such as the University of Wales.

Given that the recently published Silk Commission proposed a huge shift in financial power towards the National Assembly, today seems like an opportune moment to consider how a future Welsh government can continue David Lloyd George’s radical and redistributive legacy. The Silk Commission cannot simply lead to more incremantalism. We must take the opportunity to think big. As Lloyd George himself said, “You can’t cross a chasm in two small jumps.” We must take the opportunity to create a new People’s Budget for Wales.

The budget of 1909 was a radical step – it raised taxes on the wealthy in order to pay for pensions and unemployment insurance for the poor. It ostensibly and deliberately took money from the wealthy and the landed classes in order to provide help and assistance for the vulnerable. That principle remains central to my political beliefs. But I want to apply these beliefs to the 21st Century.

The burden of taxation in Wales is still far too regressive. Reducing taxes on the poorest contributes towards creating a Wales which has a stronger economy and a fairer society. It contributes to a fairer society because it is a central principle of liberal philosophy that those with the greatest ability to pay should contribute the most to the society that helped them with their success. But it also acts as an economic stimulus. It is known that the more disposable income that people have, the more they spend in the local economy. But people on lower incomes have what is described by economists as the highest marginal propensity to consume. This means that they will be more likely to spend any additional money on goods and services which subsequently boosts the local economy. The case for a more progressive tax structure is clear.

I am already pleased that Liberal Democrats in government in Westminster have cut taxes on the lowest paid by increasing the threshold for the personal allowance. But this does not mean Wales, with her radical political tradition, should not try to do more.

For the first time, the Silk Commission would give the National Assembly the power to make the tax system more progressive. Crucially, it recommends that the National Assembly would be able to vary the rate of tax for each of the tax rates by themselves. As a result, it would be possible to lower the tax rates for the poorest. A reduction in the basic rate from 20% to 18% would save the average worker in Wales £750 a year and would cost around £360 million.

That’s a large sum of money and before proposing any cuts, a future People’s Budget would need to plug the gap somehow. The obvious solution would be to raise taxes on the richest, but it is unclear how much this higher rate would have to rise in order to off-set the decrease in the basic rates. Raising it by enough to counterbalance this cut would ensure that the wealthy would not be recipients of such a change and would off-set some of the costs.

The real challenge though would be to look at other, more innovative ways that we could raise taxes. I believe that environmental taxes must play a bigger part in how we raise revenue. This fulfils Lloyd George’s aims as well – shifting the burden of taxation away from things society considers to be good (having a job and earning an income) and onto things that society considers to be bad (polluting the environment). In addition, technological changes and the impact of globalisation could allow us to develop innovative new charges that advance our national interest and raise revenue.

Making up £360 million in such taxes may well be difficult, but it is something the Welsh Liberal Democrats want to prioritise so that we can realise our aim of fairer taxes while at the same time supporting a stronger economy.

In my view, it will take more than five years before Wales is in a practical position to make tax changes. The Silk Commission proposes a new Wales Act within the lifetime of this parliament and realistically, it would only confer new powers on the next Assembly. If a referendum is required, then recent experience tells us that this could take an additional few years. This whole process would also be contingent on the development of greater capacity within the Welsh government for Treasury-style powers. However, my party will remain committed to reducing the tax burden for those on average income and restructuring the tax system so it delivers both a fairer society and a stronger economy.

In the meantime, I remain committed to furthering the other elements of David Lloyd George’s legacy. The People’s Budget aimed to provide dignity to the old and mitigate the impact of unemployment. It is my belief that the changes to pensions announced on Monday will contribute to the former and should be coupled with changes to the social care system to allow the elderly who need care to have it provided in the manner that they choose. The Welsh government needs to act now to improve the economy, focusing on the infrastructure and skills that would have been unthinkable to Lloyd George’s generation, to ensure that joblessness is no longer prevalent in Wales. The borrowing powers recommended by the Silk Commission will help with that too.

David Lloyd George is rightly remembered as a radical thinker and as the people’s champion. He spent his life working to build a nation which was fair and prosperous and enabled everyone to reach their potential. Our circumstances may have changed in the century-and-a-half since his birth, but those principles remain as important now as they were then.

 

Why David Lloyd George remains such a controversial figure

“Don’t be afraid to take a big step if one is indicated; you can’t cross a chasm in two small jumps.”

David Lloyd George is one of Wales’ most famous politicians, yet he has very little tangible presence in his own country. For a Welshman who still inspires Welsh and Westminster politicians today, ranging from the former Labour Prime Minister Gordon Brown to the current Deputy Prime Minister Nick Clegg, Wales and the Welsh pay very little homage to one of their best known politicians. There is a school named after him, but that is in Canada. There is also an avenue named after him in Cardiff. Across Wales there are a number of statutes of him, including one in front of the National Museum of Wales.  However, you don’t find colleges, schools, hospitals or bridges, health authorities or even national highways named after him. This is in notable contrast to the other great wartime leader and close friend of Lloyd George’s, Sir Winston Churchill. Even compared to other Welsh icons: such as Anuerin Bevan, Dylan Thomas and Owain Glyndwr there is very little Welsh public recognition for a man who has shaped our lives in more ways than perhaps any other politician before or since.

Although Wales’s most famous Welsh politician was born in Chorlton-on-Medlock in Manchester on 17th January 1863 he did not live in England for long. Within two months of his birth his ailing father, William George, returned to his native Pembrokeshire where he died the following year. His mother, Elizabeth George, then returned her native Llanystumdwy in Caernarfonshire. It was there that her brother, Richard Lloyd took on the role of the father figure and the primary influence on him until his death in 1917. It was his uncle’s surname that he put before that of his father’s to make his own surname Lloyd George.  This we know as fact but often so much of his life has developed into that of myth and legend. In time this myth and legend has meant he is cast as either a ‘hero’ or ‘devil’ to virtually everyone involved in politics. So what did this man David Lloyd George actually do, apart from being a long serving Chancellor of the Exchequer and Prime Minister?

For the Welsh nationalists there was his establishment of Cymru Fydd (Young Wales) his championing of all things Welsh including the language, the drive for Welsh home rule and the disestablishment and disendowment of the Anglican Church in Wales. He was and remains to this day the most Welsh of any politician to hold the most senior post in the land, the only first Welsh-language speaking Prime Minister.

To those who sought a classless society he represented the best example of a self made man who went to the top. Non private school and university educated, lacking political or upper class connections or patronage he achieved the highest offices in the land on merit and shear force of personality.

For the radical politicians he remained constantly independently minded, if he believed the cause was right. In 1892 he refused the party whip over failures to advance sufficiently on church disestablishment. He resisted military expenditure increases, was opposed to the Boer War and was passionate in defence of the working man, social reform and nonconformist Christianity in Wales, particularly in issues of Education. His support for a Keynesian economic programme from 1929 onwards also saw him portrayed as an economic radical.

For the social reformers he laid the foundations of the welfare state that would alter the lives of every working class household. Trade Unions were restored their political power enabling them to support the Labour Party directly. Women were given the vote and gained entry to the House of Commons as MPs, including his own daughter Megan (in 1929). Lloyd George’s 1909 ‘People’s Budget ‘ brought in wide scale health insurance and labour exchanges and most importantly the Old Age Pension, which was even known for a while as the ‘Lloyd George’. Later, Lloyd George would raise the school leaving age to 14, start providing government housing as a ‘social service’ and introduce unemployment insurance to almost the entire workforce.

Yet Lloyd George was also a man of contradictions. He had his detractors, then and now. He opposed war but later supported conscription in the First World War that brought many men to an early death. In 1922 his political rashness also nearly caused another major war against Turkey in Chanak. Lloyd George was a lifelong Liberal yet his dominance and personal ambition helped split the party and put it out of power for most of the twentieth century. He had supported Home Rule for Ireland and Wales but never introduced it in Wales and did so in Ireland in such a way as to cause a bloody civil war there. A ‘man of the people and democrat’, who often governed through a small inner circle of supporters.

A champion of nonconformists, he himself was agonistic. The Lloyd George who for decades fought against the Conservative ‘Landlords, Squires and Brewers’ would later befriend and lead these same Conservatives in a coalition government between 1916-1922. His was an anti imperialist and champion of small nations under whom the British Empire reached it biggest ever size and whose drawing up of the colonial boundaries of the Middle East would result in conflict to this very day.

From a man from such a working class background, albeit skill tradesman, Lloyd George was always short of money compared to the wealthy politicians of the time. We must remember the MPs were not salaried until 1912, some 22 years after he was first elected. A lack of finance and the need to pursue a political career that was well beyond a part-time solicitors salary meant that Lloyd George was frequently involved in money making schemes which caused adverse publicity. These ranged from the Marconi shares scandal in 1913 to the selling of honours for cash when he was Prime Minister. Both of which caused short term political damage to his reputation but perhaps his greatest political blunder came in September 1936. It was then that he visited Adolf Hitler in his Berchtesgaden home. After Hitler had called him the ‘man who won the war’ Lloyd George replied by calling him the ‘the greatest living German’. Although Lloyd George soon became very critical of Hitler this short phrase of praise would end up forever staining his political reputation and leaving the impression that he could become some form of British Pétain if the country had been invaded by the Nazis.

Lloyd George was a man who led a Liberal Party in Westminster and demanded loyalty. Yet showed little loyalty to the same party when it did not go in the direction he desired. This same Liberal party included three other members of his own family, his son Gwilym, daughter Megan and Gwilym’s brother in law, Goronwy Owen. Lloyd George’s own parliamentary son and daughter would also join other political parties after his death.  Gwilym to the Conservatives and Megan to the Labour Party. As a result the Lloyd George name became removed from Liberalism. When Megan died in 1966 as the Labour MP for Carmarthen the Lloyd George name would leave the House of Commons forever. Only his daughters Lady Olwen Carey-Evans (from his first marriage to Margaret Owen) and Jennifer (from his second marriage to Francis Stevenson) would remain loyal to the Liberal cause, albeit it in unelected capacities.

Perhaps the most remarkable thing about David Lloyd George was how far he travelled politically. He was a first language Welsh speaker who was publically schooled and non- university educated and from a one-parent working class family who became Prime Minister. This both admirers and detractors can at least agree is a feat that had not achieved before and has been be achieved since.

There is a free exhibition of David Lloyd George in the Pierhead Building, Cardiff Bay on until 30th January 2013 run by the Lloyd George Society and featuring the work of the Welsh political artist Dan Peterson

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Kirsty Williams AM is leader of the Welsh Liberal Democrats and a vice-president of the Lloyd George Society. Professor Russell Deacon is a History Tutor at Swansea University and Chair of the Lloyd George Society

3 Responses to:“Lloyd George at 150”

  1. Gerald Holtham says:

    We do not need to wait five years for a more progressive tax system, pace Kirsty Williams. The national assembly already controls council tax, which is currently regressive in house prices and surely in income too. It could be made proportional to house prices by a reform of bands and the addition of more. That would reduce the burden at the bottom and increase it at the top. Council tax for the poorest has been paid by the benefit system so in the past the reform would have saved the Treasury money but with the changes and reductions in housing benefit that is less of an issue and reform is even more needed. This change together with an indexation of council tax bands would also make public revenue in Wales more buoyant.

    By contrast the idea of making income tax more progressive is a mirage in Wales. Any increase in higher rates would be highly likely to cost revenue after a few years. It would only require a thousand or two of current top-rate taxpayers in Wales to declare themselves domiciled in England for the Welsh government to be out of pocket. Devolution of income tax around the world usually leads to a flatter tax schedule because of competition between regions for wealthy tax-payers. Wales cannot escape that phenomenon and if we are going to raise any taxes it is better to do so on things that can’t move about.

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  2. David says:

    Land Value Tax?

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  3. Alex says:

    Both fantastic pieces.

    Congratulations to Kirsty Williams for being willing to ‘think big’. This is a very interesting piece she has written – which is a very rare thing to come from any politician, let alone a leader of a party. The people ‘on the street’ have no real interest in Silk, but this blog piece has shown how relevant it can be to people’s lives.

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