Editing H. H. Asquith (section)

===Chancellor of the Exchequer, 1905–1908===
[[File:Asquith-as-Chancellor-1907.jpg|thumb|Asquith as [[Chancellor of the Exchequer]], in the House of Commons]]

Salisbury's Conservative successor as prime minister, [[Arthur Balfour]], resigned in December 1905, but did not seek a dissolution of Parliament and a general election.{{efn|A biographer of Campbell-Bannerman, [[A. J. A. Morris]], suggests that Balfour was motivated in this unusual step by the vain hope that minority government would open up the many divisions within the Liberal party.<ref name=morris>[[Morris, A. J. A.]] [http://www.oxforddnb.com/view/article/32275 "Bannerman, Sir Henry Campbell- (1836–1908)"] {{Webarchive|url=https://web.archive.org/web/20151004053857/http://www.oxforddnb.com/view/article/32275 |date=4 October 2015 }}, ''Oxford Dictionary of National Biography'', Oxford University Press, 2008. Retrieved 22 June 2015 {{ODNBsub}}</ref>}} [[King Edward VII]] invited Campbell-Bannerman to form a minority government. Asquith and his close political allies Haldane and [[Sir Edward Grey]] tried to pressure him into taking a peerage to become a figurehead prime minister in the House of Lords, giving the pro-empire wing of the party greater dominance in the House of Commons. Campbell-Bannerman called their bluff and refused to move.<ref name=morris/>{{sfn|Jenkins|p=155}} Asquith was appointed Chancellor of the Exchequer. He held the post for over two years, and introduced three budgets.{{sfn|Spender & Asquith|pp=172–173}}{{sfn|Jenkins|p=158}}

A month after taking office, Campbell-Bannerman called [[1906 United Kingdom general election|a general election]], in which the Liberals gained a landslide majority of 132.{{sfn|Jenkins|p=164}} However, Asquith's first budget, in 1906, was constrained by the annual income and expenditure plans he had inherited from his predecessor [[Austen Chamberlain]]. The only income for which Chamberlain had over-budgeted was the duty from sales of alcohol.{{efn|Jenkins, with a reference to Asquith's own reputation in that sphere, comments that Asquith did his personal best to reverse the downward trend in alcohol sales.}}{{sfn|Jenkins|p=161}} With a balanced budget, and a realistic assessment of future public expenditure, Asquith was able, in his second and third budgets, to lay the foundations for limited redistribution of wealth and welfare provisions for the poor. Blocked at first by Treasury officials from setting a variable rate of income tax with higher rates on those with high incomes, he set up a committee under [[Sir Charles Dilke]] which recommended not only variable income tax rates but also a [[supertax]] on incomes of more than £5,000 a year. Asquith also introduced a distinction between earned and unearned income, taxing the latter at a higher rate. He used the increased revenues to fund old-age pensions, the first time a British government had provided them. Reductions in selective taxes, such as that on sugar, were aimed at benefiting the poor.{{sfn|Jenkins|pp=162–164}}

Asquith planned the 1908 budget, but by the time he presented it to the Commons he was no longer chancellor. Campbell-Bannerman's health had been failing for nearly a year. After a series of heart attacks, Campbell-Bannerman resigned on 3 April 1908, less than three weeks before his death.{{sfn|Hattersley|pp=132–136}} Asquith was universally accepted as the natural successor.{{sfn|Douglas|p=123}} King Edward, who was on holiday in [[Biarritz]], sent for Asquith, who took the boat train to France and [[Kissing hands|kissed hands]] as prime minister in the [[Hôtel du Palais]], Biarritz, on 8 April.{{sfn|Jenkins|pp=179–180}}