In the United Kingdom, the word liberalism can have any of several meanings. Scholars primarily use the term to refer to classical liberalism. The term can also mean economic liberalism, social liberalism or political liberalism. It can simply refer to the ideology and practises of the historic Liberal Party (1859–1988), or in the contemporary context, of the Liberal Democrats: the successor to the old Liberal Party after it merged with the centrist Social Democratic Party (SDP), with which the Liberals had been in a Britain-wide electoral alliance since shortly after the latter was formed in 1981.
Liberalism can occasionally have the imported American meaning, especially since 2016; however, the pejorative connotation is much weaker in the UK than in the US, and social liberals from both the left and right wing continue to use liberal and illiberal to describe themselves and their opponents, respectively.
Background
Historically, the term referred to the broad liberal political alliance of the nineteenth century, formed by Whigs, Peelites, and radicals. This alliance, which developed into the Liberal Party, dominated politics for much of the Victorian era and during the years before the First World War.
British liberalism is now organised between two schools; the social liberalism of the Liberal Democrats (member LI, ALDE) and their counterpart the Alliance Party of Northern Ireland (member LI, ALDE), and the classical liberalism of the Conservative Party which was adopted in the late 1970s by the late former Prime Minister Margaret Thatcher whose fundamental changes to party policy aligned it to classical liberalism with its commitment to low taxation and economic deregulation. In his speech to the party conference in 2006, David Cameron described the party as a "liberal conservative" party, and in a speech in Bath on Thursday 22 March 2007, he described himself as a "liberal Conservative".
In addition, The Economist magazine, based in Britain and with an international audience, claims to be "liberal" and regrets the split between the two schools.
Gladstone
William Ewart Gladstone (1809–1898) dominated liberalism and the Liberal Party in the late 19th century. He served for 12 years as prime minister, spread over four terms beginning in 1868 and ending in 1894. He also served as Chancellor of the Exchequer four times and between terms was usually the minority leader. The historian H. C. G. Matthew states that Gladstone's chief legacy lay in three areas: his financial policy; his support for Home Rule (devolution) that modified the view of the unitary state of Great Britain; and his idea of a progressive, reforming party broadly based and capable of accommodating and conciliating varying interests, along with his speeches at mass public meetings.H.C.G. Matthew, "Gladstone, William Ewart (1809–1898)", Oxford Dictionary of National Biography, Oxford University Press, 2004; online edn, May 2011.
Historian Walter L. Arnstein concludes "Notable as the Gladstonian reforms had been, they had almost all remained within the nineteenth-century Liberal tradition of gradually removing the religious, economic, and political barriers that prevented men of varied creeds and classes from exercising their individual talents in order to improve themselves and their society. As the third quarter of the century drew to a close, the essential bastions of Victorianism still held firm: respectability; a government of aristocrats and gentlemen now influenced not only by middle-class merchants and manufacturers but also by industrious working people; a prosperity that seemed to rest largely on the tenets of laissez-faire economics; and a Britannia that ruled the waves and many a dominion beyond.Walter L. Arnstein, Britain Yesterday and Today: 1832 the Present (6th ed. 1992) p. 125
Lord Acton wrote in 1880 that he considered Gladstone one "of the three greatest Liberals" (along with Edmund Burke and Lord Macaulay).Herbert Paul (ed.), Letters of Lord Acton to Mary Gladstone (George Allen, 1904), p. 57.
In 1909 the Liberal Chancellor David Lloyd George introduced his "People's Budget", the first budget which aimed to redistribute wealth. The Liberal statesman Lord Rosebery ridiculed it by asserting Gladstone would reject it, "Because in his eyes, and in my eyes, too, as his humble disciple, Liberalism and Liberty were cognate terms; they were twin-sisters."Lord Rosebery, The Budget. Its Principles and Scope. A Speech Delivered to the Commercial Community of Glasgow, 10 September 1909 (London: Arthur L. Humphreys, 1909), pp. 30–31.
Lloyd George had written in 1913 that the Liberals were "carving the last few columns out of the Gladstonian quarry".Chris Wrigley, "‘Carving the Last Few Columns out of the Gladstonian Quarry’: The Liberal Leaders and the Mantle of Gladstone, 1898–1929", in David Bebbington and Roger Swift (eds), Gladstone Centenary Essays (Liverpool University Press, 2000), p. 247.
Lloyd George said of Gladstone in 1915: "What a man he was! Head and shoulders above anyone else I have ever seen in the House of Commons. I did not like him much. He hated Nonconformists and Welsh Nonconformists in particular, and he had no real sympathy with the working-classes. But he was far and away the best Parliamentary speaker I have ever heard. He was not so good in exposition."Wrigley, p. 247.
Writing in 1944 the classical liberal economist Friedrich Hayek said of the change in political attitudes that had occurred since the Great War: "Perhaps nothing shows this change more clearly than that, while there is no lack of sympathetic treatment of Bismarck in contemporary English literature, the name of Gladstone is rarely mentioned by the younger generation without a sneer over his Victorian morality and naive utopianism".F.A. Hayek, The Road to Serfdom (Routledge, 2001), p. 188.
In the latter half of the 20th century Gladstone's economic policies came to be admired by Thatcherite Conservatives. Margaret Thatcher proclaimed in 1983: "We have a duty to make sure that every penny piece we raise in taxation is spent wisely and well. For it is our party which is dedicated to good housekeeping—indeed, I would not mind betting that if Mr Gladstone were alive today he would apply to join the Conservative Party".Margaret Thatcher, 'Speech to the Conservative Party Conference', 14 October 1983. In 1996, she said: "The kind of Conservatism which he and I...favoured would be best described as 'liberal', in the old-fashioned sense. And I mean the liberalism of Mr Gladstone, not of the latter-day collectivists".Margaret Thatcher, ‘Keith Joseph Memorial Lecture', 11 January 1996. That sort of liberalism in the 21st century is termed neoliberalism.
A. J. P. Taylor wrote "William Ewart Gladstone was the greatest political figure of the nineteenth century. I do not mean by that that he was necessarily the greatest statesman, certainly not the most successful. What I mean is that he dominated the scene."
1900s: New Liberalism and welfare state
When the Liberals lost the 1895 general election, a political crisis shook the Liberal Party. Until that, the Liberal Party adhered to the Gladstonian liberalism, of free markets, low taxation, self-help and freedom of choice, but after the 1895 election many Liberals clamoured for political reform. The reformers' leaders were Thomas Hill Green and Herbert Samuel, that in the Progressive Review of December 1896, said that the classical liberalism was "sapped and raddled", claiming for more state's powers. Samuel's "New Liberalism" called for old-age pensions, labour exchanges (job-placement organizations), and workers' compensation, all prefiguring modern welfare. Other important intellectuals 1906-14 included H. A. L. Fisher, Gilbert Murray, G. M. Trevelyan, Edwin Montagu, Charles Masterman, Alfred Marshall, Arthur Cecil Pigou and young John Maynard Keynes.Richard Toye, "Keynes, Liberalism, and ‘the emancipation of the mind’." English Historical Review 130.546 (2015): 1162-1191 online . Socialists meanwhile dominated the Fabian Society.David Hopkinson, "Vintage Liberals" History Today (June 1978) 28#6 pp 364–71
Key politicians included future prime ministers Henry Campbell-Bannerman, Winston Churchill,Martin Pugh, "Churchill's Strange Brew" History Today (May 2011) 61 #5 pp 33-36. H. H. Asquith and David Lloyd George, sceptics of non-interventionism on economy and free market, embraced the New Liberalism. During the Liberal Governments of 1905–1916, the welfare state was introduced to provide provision for lower incomes. In 1908 a pension system was created with old-age pensions for people older than age 70; an income tax was introduced and in 1911 the National Insurance Act was approved.R. C. K. Ensor, England 1870–1914 (1936), pp. 384–420. To fund extensive welfare reforms Lloyd George proposed taxes on land ownership and high incomes in the "People's Budget" (1909), which the Conservative-dominated House of Lords rejected. The resulting constitutional crisis was only resolved after two elections in 1910 and the passage of the Parliament Act 1911. His budget was enacted in 1910, and with the National Insurance Act 1911 and other measures helped to establish the modern welfare state. Lloyd George promoted the disestablishment of the Church in Wales, until the outbreak of the First World War in 1914 suspended its implementation. All Liberals were outraged when Conservatives used their majority in the House of Lords to block reform legislation. In the House of Lords, the Liberals had lost most of their members, who in the 1890s "became Conservative in all but name." The government could force the unwilling king to create new Liberal peers, and that threat did prove decisive in the battle for dominance of Commons over Lords in 1911.Kenneth Rose, King George V (1984) pp 113, 121; Ensor. p. 430.
However, the Great War of 1914 reduced popular support for the Liberals and the Party split in two factions in 1918: Asquith's supporters and Lloyd George's coupons. While Asquith became Leader of the Opposition, Lloyd George forged a coalition with the Conservative leader Bonar Law, continuing to be Prime Minister with a mostly Conservative base. The Liberal internal conflict caused many reformer and radical voters to join in the Labour Party, while more conservative liberals merged to the Conservatives led by Stanley Baldwin. The 1924 general election signalled the end of the Liberal Party as government force. However, the New Liberalism continued to be the preferred ideology by the Liberal Party, until its dissolution in 1988 when formed the Liberal Democrats.
1940–1975: Post-war consensus The post-war consensus began in the 1930s when Liberal intellectuals led by John Maynard Keynes and William Beveridge developed a series of plans that became especially attractive as the wartime government promised a much better post-war Britain and saw the need to engage every sector of society. The foundations of the post-war consensus was the Beveridge Report. This was a report by William Beveridge, a Liberal economist who in 1942 formulated the concept of a more comprehensive welfare state in Great Britain.Kenneth O. Morgan, Britain Since 1945: The People's Peace (2001), pp. 4, 6 The report, in shortened terms, aimed to bring widespread reform to the United Kingdom and did so by identifying the "five giants on the road of reconstruction": "Want… Disease, Ignorance, Squalor and Idleness". In the report were labelled a number of recommendations: the appointment of a minister to control all the insurance schemes; a standard weekly payment by people in work as a contribution to the insurance fund; old age pensions, maternity grants, funeral grants, pensions for widows and for people injured at work; a new national health service to be established.