During the 19th century the Liberal Party was broadly in favour of what would today be called classical liberalism: supporting laissez-faire economic policies such as free trade and minimal government interference in the economy (this doctrine was usually termed 'Gladstonian Liberalism' after the Victorian Liberal Prime Minister William Gladstone). The Liberal Party favoured social reform, personal liberty, reducing the powers of the Crown and the Church of England (many of them were Nonconformists) and an extension of the franchise (right to vote). Sir William Harcourt, a prominent Liberal politician in the Victorian era, said this about liberalism in 1873:
Liberty does not consist in making others do what you think right. The difference between a free Government and a Government which is not free is principally this—that a Government which is not free interferes with everything it can, and a free Government interferes with nothing except what it must. A despotic Government tries to make everybody do what it wishes, a Liberal Government tries, so far as the safety of society will permit, to allow everybody to do what he wishes. It has been the function of the Liberal Party consistently to maintain the doctrine of individual liberty. It is because they have done so that England is the country where people can do more what they please than in any country in the world.
The political terms of "modern", "progressive" or "new" Liberalism began to appear in the mid to late 1880s and became increasingly common to denote the recent tendency in the Liberal Party to favour an increased role for the state as more important than the classical liberal stress on self-help and freedom of choice.
By the early 20th century the Liberals stance began to shift towards "New Liberalism", what would today be called social liberalism: a belief in personal liberty with a support for government intervention to provide minimum levels of welfare. This shift was best exemplified by the Liberal government of Herbert Henry Asquith and his Chancellor David Lloyd George, whose Liberal reforms in the 1900s created a basic welfare state.
The Liberal Party was an early adopter of Keynesian economics: David Lloyd George adopted a Keynesian programme at the 1929 general election entitled We Can Conquer Unemployment!. Although by this stage the Liberals had declined to third party status. The Liberals now (as expressed in the Liberal Yellow Book) regarded opposition to state intervention as being a characteristic of right-wing extremists.
After nearly becoming extinct in the 1940s and 50s, the Liberal Party revived its fortunes somewhat under the leadership of Jo Grimond in the 1960s, by positioning itself as a radical centrist non-socialist alternative to the Conservative government of the time.
The Liberal Party grew out of the Whigs, which had its origins as an aristocratic faction in the reign of Charles II. The Whigs were in favour of reducing the power of the Crown and increasing the power of the Parliament. Although their motives in this were originally to gain more power for themselves, the more idealistic Whigs gradually came to support an expansion of democracy for its own sake. The great figures of reformist Whiggery were Charles James Fox (died 1806) and his disciple and successor Earl Grey. After decades in opposition the Whigs came to power under Grey in 1830 and carried the First Reform Act in 1832.
The Reform Act was the climax of Whiggery but also brought about the Whigs' demise. The admission of the middle classes to the franchise and to the House of Commons led eventually to the development of a systematic middle class liberalism and the end of Whiggery, although for many years reforming aristocrats held senior positions in the party. In the years after Grey's retirement the party was led first by Lord Melbourne, a fairly traditional Whig, and then by Lord John Russell, the son of a Duke but a crusading radical, and Lord Palmerston, a renegade Irish Tory and essentially a conservative, although capable of radical gestures.
As early as 1839 Russell had adopted the name Liberal Party, but in reality the party was a loose coalition of Whigs in the House of Lords and Radicals in the Commons. The leading Radicals were John Bright and Richard Cobden, who represented the manufacturing towns that had gained representation under the Reform Act. They favoured social reform, personal liberty, reducing the powers of the Crown and the Church of England (many of them were Nonconformists), avoidance of war and foreign alliances (which were bad for business), and above all free trade. For a century free trade was the one cause which could unite all Liberals.
In 1841 the Liberals lost office to the Conservatives under Sir Robert Peel, but their period in opposition was short, because the Conservatives split over the repeal of the Corn Laws, a free trade issue, and a faction known as the Peelites (but not Peel himself, who died soon after), defected to the Liberal side. This allowed ministries led by Russell, Palmerston and the Peelite Lord Aberdeen to hold office for most of the 1850s and 1860s. The leading Peelite was William Ewart Gladstone, who was a zealous reforming Chancellor of the Exchequer in most of these governments. The formal foundation of the Liberal party is traditionally traced to 1859 and the formation of Palmerston's second government.
The Whig-Radical amalgam could not become a true modern political party, however, while it was dominated by aristocrats, and it was not until the departure of the "Two Terrible Old Men", Russell and Palmerston, that Gladstone could become the first leader of the modern Liberal Party. This was brought about by Palmerston's death in 1865 and Russell's retirement in 1868. After a brief Conservative interlude (during which the Second Reform Act was passed by agreement between the parties), Gladstone won a huge victory at the 1868 election and formed the first Liberal government. The establishment of the party as a national membership organisation came with the foundation of the National Liberal Federation in 1877.
For the next thirty years Gladstone and Liberalism were synonymous. The "Grand Old Man", as he became known, was Prime Minister four times and the powerful flow of his rhetoric dominated British politics even when he was out of office. His rivalry with the Conservative leader Benjamin Disraeli became legendary. Gladstone was a High Church Anglican and enjoyed the company of aristocrats, but he grew ever more radical as he grew older: he was, as one wit put it, "a Tory in all but essentials". Queen Victoria, who had grown up as a Whig supporter under the tutelage of Melbourne, became a Conservative in reaction to Gladstone's moralising Liberalism.
Gladstone's great achievements in office were his reforms to education, land reform (particularly in Ireland, where he ended centuries of landlord oppression), the disestablishment of the (Anglican) Church of Ireland through the Irish Church Disestablishment Act 1869, the introduction of democratic local government, reform allowing the secret ballot (the Ballot Act 1872) and removing electoral corruption, the abolition of patronage in the civil service and the army, and the Third Reform Act which greatly extended the vote to almost all adult males. Gladstone's reforming tendencies were borne partly out of his visit to Lancashire during The Cotton Famine, where he was impressed by working class qualities. It was during the 1860s that Gladstone became known as 'The People's William'.
In foreign policy, Gladstone was in general against foreign entanglements but did not resist the reality of imperialism. For example, he approved of the occupation of Egypt by British forces in 1882.
In the 1874 general election Gladstone was defeated by the Conservatives under Disraeli during a sharp recession. He formally resigned as Liberal leader and was succeeded by the Marquess of Hartington, but he soon changed his mind and returned to active politics. He strongly disagreed with Disraeli's pro-Ottoman foreign policy and in 1880 he conducted the first outdoor mass-election campaign in Britain, known as the Midlothian campaign. The Liberals won a large majority in the 1880 election. Hartington ceded his place and Gladstone resumed office.
Among the consequences of the Third Reform Act (1884–85) was the giving of the vote to the Catholic peasants in Ireland, and the consequent creation of an Irish Parliamentary Party led by Charles Stewart Parnell. In the 1885 general election this party won the balance of power in the House of Commons, and demanded Irish Home Rule as the price of support for a continued Gladstone ministry. Gladstone personally supported Home Rule, but a strong Liberal Unionist faction led by Joseph Chamberlain, along with the last of the Whigs, Hartington, opposed it.
The result was a catastrophic split in the Liberal Party, and heavy defeat in the 1886 election at the hands of Lord Salisbury. There was a final weak Gladstone ministry in 1892, but it also was dependent on Irish support and failed to get Irish Home Rule through the House of Lords. Gladstone finally retired in 1894, and his ineffectual successor, Lord Rosebery, led the party to another heavy defeat in the 1895 general election.
Another consequence of the Third Reform Act was the rise of Lib-Lab candidates, in the absence of any committed Labour Party. The Act split all county constituencies (which were represented by multiple MPs) in to single-member constituencies, roughly corresponding to population patterns. In areas with working class majorities, in particular coal-mining areas, Lib-Lab candidates were popular, and they received sponsorship and endorsement from trade unions. In the first election after the Act was passed (1885), thirteen were elected, up from two in 1874. The Third Reform Act also facilitated the demise of the Whig old guard: in two-member constituencies, it was common to pair a Whig and a radical under the Liberal banner. After the Third Reform Act, fewer Whigs were selected as candidates.
The Liberals languished in opposition for a decade, while the coalition of Salisbury and Chamberlain held power. The 1890s were marred by infighting between the three principal successors to Gladstone, party leader William Harcourt, former Prime Minister Lord Rosebery, and Gladstone's personal secretary, John Morley. This intrigue finally led Harcourt and Morley to resign their positions in 1898 as they continued to be at loggerheads with Rosebery over Irish home rule and issues relating to imperialism. Replacing Harcourt as party leader was Sir Henry Campbell-Bannerman. Harcourt's resignation briefly muted the turmoil in the party, but the beginning of the Second Boer War soon nearly broke the party apart, with Rosebery and a circle of supporters including important future Liberal leaders H.H. Asquith, Edward Grey, and Richard Burdon Haldane forming a clique dubbed the "Liberal Imperialists" that supported the government in the prosecution of the war. On the other side, more radical members of the party formed a Pro-Boer faction that denounced the conflict and called for an immediate end to hostilities. Quickly rising to prominence among the Pro-Boers was David Lloyd George, a relatively new MP and master of rhetoric and demagoguery that took advantage of having a national stage to speak out on a controversial issue to begin his rise to stardom in the party. Harcourt and Morley also sided with this group, though with slightly different aims. Campbell-Bannerman tried to keep these forces together at the head of a moderate Liberal rump, but in 1901 he delivered a speech on the government's "methods of barbarism" in South Africa that pulled him further to the left and nearly tore the party in two. The party was saved after Salisbury's retirement in 1902 when his successor, Arthur Balfour, pushed a series of unpopular initiatives such as a new education bill and Joseph Chamberlain called for a new system of protectionist tariffs. Campbell-Bannerman was able to rally the party around the traditional liberal platform of free trade and land reform and lead them to the greatest election victory in their history. This would prove the last time the Liberals won a majority in their own right.
Although he presided over a large majority, Sir Henry Campbell-Bannerman was overshadowed by his ministers, most notably Herbert Henry Asquith at the Exchequer, Edward Grey at the Foreign Office, Richard Burdon Haldane at the War Office and David Lloyd George at the Board of Trade. An ill Campbell-Bannerman retired in 1908 and died later that year. He was succeeded by Asquith, who stepped up the government's radicalism. Lloyd George succeeded Asquith at the Exchequer, and was in turn succeeded at the Board of Trade by Winston Churchill, a recent defector from the Conservatives.
The Liberals pushed through much legislation, including the regulation of working hours, national insurance and welfare. It was at this time that a political battle over the so-called People's Budget resulted in the passage of an act ending the power of the House of Lords to block legislation. The cost was high, however, as the government needed to call two general elections in 1910 to validate its position and ended up frittering away most of its large majority, being left once again dependent on the Irish Nationalists.
As a result Asquith was forced to introduce a new third Home Rule bill in 1912. Since the House of Lords no longer had the power to block the bill, the Unionist's Ulster Volunteers led by Sir Edward Carson, launched a campaign of opposition that included the threat of armed resistance in Ulster and the threat of mutiny by army officers in Ireland in 1914 (see Curragh Incident). In their resistance to Home Rule the Ulster Protestants had the full support of the Conservatives, whose leader, Andrew Bonar Law, was of Ulster-Scots descent. The country seemed to be on the brink of civil war when World War I broke out in August 1914.
The war struck at the heart of everything British Liberals believed in. Several Cabinet ministers resigned, and Asquith, the master of domestic politics, proved a poor war leader. Lloyd George and Churchill, however, were zealous supporters of the war, and gradually forced the old pacifist Liberals out. The poor British performance in the early months of the war forced Asquith to invite the Conservatives into a coalition (on 17 May, 1915). This marked the end of the last all-Liberal government. This coalition fell apart at the end of 1916, when the Conservatives withdrew their support from Asquith and gave it to Lloyd George instead, who became Prime Minister at the head of a coalition government largely made up of Conservatives. Asquith and his followers moved to the opposition benches in Parliament and the Liberal Party was split once again.
In the 1918 general election Lloyd George, "the Man who Won the War", led his coalition into another khaki election, and won a sweeping victory over the Asquithian Liberals and the newly emerging Labour Party. Lloyd George and the Conservative leader Andrew Bonar Law wrote a joint letter of support to candidates to indicate they were considered the official Coalition candidates – this "coupon" as it became known was issued against many sitting Liberal MPs, often to devastating effect, though not against Asquith himself. Asquith and most of his colleagues lost their seats. Lloyd George still claimed to be leading a Liberal government, but he was increasingly under the influence of the rejuvenated Conservative party. In 1922 the Conservative backbenchers rebelled against the continuation of the coalition, citing in particular the Chanak Crisis over Turkey and Lloyd George's corrupt sale of honours amongst other grievances, and Lloyd George was forced to resign. The Conservatives came back to power under Bonar Law and then Stanley Baldwin.
At the 1922 and 1923 elections the Liberals won barely a third of the vote and only a quarter of the seats in the House of Commons, as many radical voters abandoned the divided Liberals and went over to Labour. In 1922 Labour became the official opposition. A reunion of the two warring factions took place in 1923 when the new Conservative Prime Minister Stanley Baldwin committed his party to protective tariffs, causing the Liberals to reunite in support of free trade. The party gained ground in the 1923 general election but ominously made most of its gains from Conservatives whilst losing ground to Labour - a sign of the party's direction for many years to come. The party remained the third largest in the House of Commons, but the Conservatives had lost their majority. There was much speculation and fear about the prospect of a Labour government, and comparatively little about a Liberal government, even though it could have plausibly presented an experienced team of ministers compared to Labour's almost complete lack of experience, as well as offering a middle ground that could get support from both Conservatives and Labour in crucial Commons divisions. But instead of trying to force the opportunity to form a Liberal government, Asquith decided instead to allow Labour the chance of office in the belief that they would prove incompetent and this would set the stage for a revival of Liberal fortunes at Labour's expenses. It was a fatal error. Labour was determined to destroy the Liberals and become the sole party of the left. Ramsay MacDonald was forced into a snap election in 1924, and although his government was defeated, he achieved his objective of virtually wiping the Liberals out as many more radical voters now moved to Labour whilst moderate middle-class Liberal voters concerned about socialism moved to the Conservatives. The Liberals were reduced to a mere forty seats in Parliament, only seven of which had been won against candidates from both parties and none of these formed a coherent area of Liberal survival. The party seemed finished and during this period some Liberals, such as Churchill, went over to the Conservatives, while others went over to Labour. (Several Labour ministers of later generations, such as Michael Foot and Tony Benn, were the sons of Liberal MPs.)
Asquith died in 1928 and the enigmatic figure of Lloyd George returned to the leadership and began a drive to produce coherent policies on many key issues of the day. In the 1929 general election he made a final bid to return the Liberals to the political mainstream, with an ambitious programme of state stimulation of the economy called We Can Conquer Unemployment!, largely written for him by the Liberal economist John Maynard Keynes. The Liberals gained ground, but once again it was at the Conservatives' expense whilst also losing seats to Labour. Indeed the urban areas of the country suffering heavily from unemployment, which might have been expected to respond the most to the radical economic policies of the Liberals instead gave the party its worst results. By contrast most of the party's seats were won either due to the absence of a candidate from one of the other parties or in rural areas on the "Celtic fringe", where local evidence suggests that economic ideas were at best peripheral to the electorate's concerns. The Liberals now found themselves with 59 members holding the balance of power in a Parliament where Labour was the largest party but lacked an overall majority. Lloyd George offered a degree of support to the Labour government in the hope of winning concessions, including a degree of electoral reform to introduce the alternative vote, but this support was to prove bitterly divisive as the Liberals increasingly divided between those seeking to gain what Liberal goals they could achieve, those who preferred a Conservative government to a Labour one and vice-versa.
In 1931 MacDonald's government fell apart under the Great Depression, and the Liberals agreed to join his National Government, dominated by the Conservatives. Lloyd George himself was ill and did not actually join. Soon, however, the Liberals faced another divisive crisis when a National Government was proposed to fight the 1931 general election with a mandate for tariffs. From the outside, Lloyd George called for the party to abandon the government completely in defence of free trade, but only a few MPs and candidates followed. Another group under Sir John Simon then emerged, who were prepared to continue their support for the government and take the Liberal places in the Cabinet if there were resignations. The third group under Sir Herbert Samuel pressed for the parties in government to fight the election on separate platforms. In doing so the bulk of Liberals remained supporting the government, but two distinct Liberal groups had emerged within this bulk - the National Liberals led by Simon, also known as "Simonites", and the "Samuelites" or "official Liberals", led by Samuel who remained as the official party. Both groups secured about 35 MPs but proceeded to diverge even further after the election, with the National Liberals remaining supporters of the government throughout its life. There were to be a succession of discussions about them rejoining the Liberals, but these usually foundered on the issues of free trade and continued support for the National Government. In 1946 the Liberal and National Liberal party organisations in London did merge.
The official Liberals found themselves a tiny minority within a government committed to protectionism. Slowly they found this issue to be one they could not support. In early 1932 it was agreed to suspend the principle of collective responsibility to allow the Liberals to oppose the introduction of tariffs. Later in 1932 the Liberals resigned their ministerial posts over the introduction of the Ottawa Agreement on Imperial Preference. However they remained sitting on the government benches supporting it in Parliament, though in the country local Liberal activists bitterly opposed the government. Finally in late 1933 the Liberals crossed the floor of the House of Commons and went into complete opposition. By this point their number of MPs was severely depleted. In the 1935 general election, just 17 Liberal MPs were elected, along with Lloyd George and three followers as "independent Liberals". Immediately after the election the two groups reunited, though Lloyd George declined to play much of a formal role in his old party. Over the next ten years there would be further defections as MPs deserted to either the National Liberals or Labour. Yet there were a few recruits, such as Clement Davies, who had deserted to the National Liberals in 1931 but now returned to the party during the Second World War and who would lead it after the war.
In 1940 they joined Churchill's wartime coalition government, with Sinclair serving as Secretary of State for Air, the last British Liberal to hold Cabinet rank office. However, it was a sign of the party's lack of importance that they were not included in the War Cabinet. At the 1945 general election, however, Sinclair and many of his colleagues lost their seats to both Conservatives and Labour. By 1951 there were only six MPs; all but one of them were aided by the fact that the Conservatives refrained from fielding candidates in those constituencies. In 1957 this total fell to five when one of the Liberal MPs died and the subsequent by-election was lost to the Labour Party, which selected the former Liberal Deputy Leader Lady Megan Lloyd George as its own candidate. The Liberal Party seemed close to extinction. During this low period, it was often joked that Liberal MPs could hold meetings in the back of one taxi.
The Liberals became the first of the major British political parties to advocate British membership of the European Economic Community. Grimond also sought an intellectual revival of the party, seeking to position it as a non-socialist radical alternative to the Conservative government of the day. In particular he canvassed the support of the young post-war university students and recent graduates, appealing to younger voters in a way that many of his recent predecessors did not, and asserting a new strand of Liberalism for the post-war world.
The new middle-class suburban generation began to find the Liberals' policies attractive again. Under Grimond (who retired in 1967) and his successor, Jeremy Thorpe, the Liberals regained the status of a serious third force in British politics, polling up to 20% of the vote but unable to break the duopoly of Labour and Conservative and win more than fourteen seats in the Commons. An additional problem was competition in the Liberal heartlands in Scotland and Wales from the Scottish National Party and Plaid Cymru who both grew as electoral forces from the 1960s onwards.
In local elections Liverpool remained a Liberal stronghold, with the party taking the plurality of seats on the elections to the new Liverpool Metropolitan Borough Council in 1973. In the February 1974 general election the Conservative government of Edward Heath won a plurality of votes cast, but the Labour Party gained a plurality of seats due to the Ulster Unionist MPs refusing to support the Conservatives after the Northern Ireland Sunningdale Agreement. The Liberals now held the balance of power in the Commons. Conservatives offered Thorpe the Home Office if he would join a coalition government with Heath. Thorpe was personally in favour of it, but the party insisted on a clear government commitment to introducing proportional representation and a change of Prime Minister. The former was unacceptable to Heath's Cabinet and the latter to Heath personally, so the talks collapsed. Instead a minority Labour government was formed under Harold Wilson but with no formal support from Thorpe. In the October 1974 general election the Liberals slipped back slightly and the Labour government won a wafer-thin majority.
Thorpe was subsequently forced to resign after allegations about his private life. The party's new leader, David Steel negotiated the Lib-Lab pact with Wilson's successor as Prime Minister, namely James Callaghan. According to this pact, the Liberals would support the government in crucial votes in exchange for some influence over policy. The agreement lasted from 1977–1978, but proved mostly fruitless, for two reasons: the Liberals' key demand of proportional representation was rejected by most Labour MPs, whilst the contacts between Liberal spokespersons and Labour ministers often proved detrimental, such as between finance spokesperson John Pardoe and Chancellor of the Exchequer Denis Healey, who were mutually antagonistic.
When the Labour government fell in 1979, the Conservatives under Margaret Thatcher won a victory which served to push the Liberals back into the margins. In 1981 defectors from the moderate wing of the Labour Party, led by former Cabinet ministers Roy Jenkins, David Owen and Shirley Williams, founded the Social Democratic Party. The two parties fought the 1983 and 1987 general elections jointly as the SDP-Liberal Alliance. During 1982 and 1983, at the depths of Labour's fortunes under Michael Foot, there was much talk of the Alliance becoming the dominant party of the left and even of Jenkins becoming Prime Minister. In fact, while the Alliance won over 20% of the vote each time, it never made the hoped-for breakthrough in parliamentary seats. It was prevented from doing so by the non-proportional nature of the First Past The Post electoral system used in Britain.
In 1988 the Liberals and Social Democrats merged to create what came to be called the Liberal Democrats. Over two-thirds of the members, and all the serving MPs, of the Liberal Party joined this party, led first jointly by Steel and the SDP leader Robert Maclennan, and later by Paddy Ashdown (1988-99), Charles Kennedy (1999-2006), Sir Menzies Campbell (2006-07) and Nick Clegg (incumbent).
A group of Liberal opponents of the merger, including Michael Meadowcroft (formerly Liberal MP for Leeds West) and Dr Paul Wiggin (who served on Peterborough City Council as a Liberal), continued under the old name of "the Liberal Party". This was legally a new organisation (the headquarters, records, assets and debts of the old party were inherited by the Liberal Democrats), but its constitution asserts it to be the same Liberal party. Though the merger process was traumatic and the new party suffered a few years of extremely poor poll results, it gradually found much greater electoral success than the Liberal Party had done in the post-war era. In the 2005 General Election, the Liberal Democrats elected 62 MPs to the House of Commons, a far cry from the days when the Liberals had just 5 MPs and Liberalism as a political force had seemed moribund.
As was the case with the Liberal Party for most of the 20th century, the Liberal Democrats face constant questioning about which of the other two parties they are closest to, in particular about which they would support in the event of a hung parliament. The party is keen to maintain its independent identity however, and argues that the need for a modern Liberal force in British politics has never been greater.