Lloyd George had become the Prime Minister in 1916 because of the national wartime emergency, and following the 1918 election he continued, leading the coalition of the majority of Liberals and the Conservatives. The coalition and his personal position at its head both seemed secure with a massive majority of 526 out of 707 MPs. The leaders of the Conservative party were in favour of Lloyd George's leadership, he was still greatly respected for his role in the war, but more importantly, he was thought vital for blocking the continuing rise of socialism, with his appeal to the left and the newly enlarged electorate. Socialist extremism was increasing quickly, with Trade Union membership increasing from 4.1million to 6.5million during the wars. The Conservative leaders may have also been happy to see the Liberal party remain split between the followers of Lloyd George and Asquith.
However, the situation even then was not wholly good for Lloyd George. The split in the Liberal party meant that Asquith was still the official leader, in charge on the assets and machinery of the Liberal party. In the coalition, the Liberals were massively outnumbered, with 133 MPs compared to 383 Conservative MPs. The Conservatives were the only party capable of operating independently, and therefore Lloyd George needed to maintain his popularity with them if he was to survive. He was truly the "Prisoner of the Tories", as Harold Macmillan put it.
This situation convinced Lloyd George that he had to escape the old party structures. Therefore, in March 1920, he launched his plans to create a new Centre party, fusing together those Liberals who supported him and the bulk of the Conservatives. This would also free him from Liberal dogma, such as on free trade, and the right wing Conservative Diehards, who put up much opposition to him. However, this idea could not have worked in peacetime conditions. A party needs a common basis of sentiment and ideology. The power seeking tactics of top level politicians would not be enough to hold together a national party. In the end this plan was blocked by the Liberal ministers in his government, who were more loyal to their historic party.
After the war, Lloyd George was determined to recapture his old image as a great social reformer, and the Coalition made several pledges to the country promising social reforms. He said that he wanted to "make Britain a fit country for heroes to live in". In the first 2 years of the coalition, these were delivered. Education reforms, in the form of raising the school leaving age, school building programmes, increases in teachers wages and the start of evening classes were brought in. There were extensions to the unemployment and old age pension benefits. Addison, a Liberal minister, brought in his Housing Act in 1919, forcing councils to build housing. This policy produced some 170,000 homes, although this was less than was promised. There was land settlement and aid for agriculture. Some of the reason behind these programmes was doubtless to diffuse the Radical Socialist feeling building up in the country, but it also reinforced Lloyd George's reputation as a reformer, which was a major reason why the Conservatives continued to support his government.
However, the Coalition's programme was greatly damaged when a depression set arose in 1921. This came to dominate domestic policies. Unemployment rose by 400,000 to 2 million from April to December 1921. The Conservatives pressured the government to cut back on benefits and housing. Lloyd George made some effort to ease the problems,…