David Lloyd George
Liberal leader

The disastrous election result in 1924 left the Liberals as a weak third party in British politics behind the ascendant Labour Party, with just over 40 MPs. Although Asquith, who had again lost his seat and was created an Earl, remained Liberal leader, Lloyd George was elected chairman of the Liberal MPs by 26 votes to 7. Sir John Simon and his followers were still loyal to Asquith (after 1931 Simon would lead a breakaway National Liberal Party, which eventually merged with the Conservatives) whilst Walter Runciman led a separate radical group within the Parliamentary Party.

Lloyd George was now mainly interested in the reform of land ownership, but had only been permitted to put a brief paragraph about it in the hastily drafted 1924 Liberal manifesto. In the autumn of 1925, despite the hostility of Charles Hobhouse, Runciman and Alfred Mond, he began an independent campaign, soon to become "The Land and the Nation" (the Green Book, first of a series of policy papers produced by Lloyd George in the late 1920s). Asquith rebuked him, but was ignored; they reached an agreement in principle on 2 December, then together they presented Lloyd George's plans to the National Liberal Federation on 26 February 1926.

The Liberal Shadow Cabinet, including Lloyd George, unequivocally backed Baldwin's handling of the General Strike on 3 May 1926, but Lloyd George then wrote an article for the American press more sympathetic to the strikers, and did not attend the Shadow Cabinet on 10 May, sending his apologies on "policy grounds". Asquith sent him a public letter (20 May) rebuking him for not attending the meeting to discuss his opinions with colleagues in private. Lloyd George's letter of 10 May had not been published, making it appear that Asquith had fired the first shot, and Lloyd George sent a public reply, moderate in tone (the journalist C. P. Scott helped him draft it), on 25 May. In late May, the executive of the National Liberal Federation convened to plan the agenda for the following month's conference. 16 were pro-Asquith and 8 pro-Lloyd George; they planned a motion expressing confidence in Asquith, but another option was also proposed to seek Asquith's opinion first, and also general feeling of regret at having been forced to choose between Asquith and Lloyd George. Asquith then wrote another public letter (1 June) stating that he regarded Lloyd George's behaviour as tantamount to resignation, the same as if a Cabinet Minister had refused to abide by the principle of collective responsibility. Twelve leading Liberals wrote in Asquith's support to The Times (1 June); however, Lloyd George had more support in the wider party than among the grandees: the London Liberal Candidates' Association (3 June) defied its officers and expressed its dismay at the split, effectively supporting Lloyd George, and on 8 June the Liberal MPs voted 20:10 urging a reconciliation. Asquith had planned to launch a fightback at the National Liberal Federation in Weston-super-Mare, but on 12 June, five days before the conference was due to start, he suffered a stroke which put him out of action for three months. Lloyd George was given a rapturous welcome. Asquith resigned as party leader in October 1926, dying in 1928.

As Liberal leader at last, Lloyd George used his fund to finance candidates and put forward innovative ideas for public works to reduce unemployment, detailed in works such as Britain's Industrial Future (known as the Yellow Book), and We Can Conquer Unemployment (known as the Orange Book). Charles Masterman, a member of the commission which prepared Britain's Industrial Future, wrote: "When Lloyd George came back to the party, ideas came back to the party". Lloyd George was helped by John Maynard Keynes to write We Can Conquer Unemployment, setting out economic policies to solve unemployment. In 1927, Lloyd George gave £300,000 and an annual grant of between £30,000 and £40,000 for the operations of the Liberal headquarters. He also gave £2,000 per annum to the parliamentary party until 1931. Even with the money, the results at the 1929 general election were disappointing. The Liberals increased their support only to 59 seats, while Labour became the largest party for the first time. Once again, the Liberals ended up supporting a minority Labour government. In 1929, Lloyd George became Father of the House (longest-serving member of the Commons), an honorific position without power.
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