On 10 August 1911, the House of Commons voted by 265 to 173 to approve a government motion introducing salaries for MPs.

The reform, championed by David Lloyd George, the Liberal chancellor of the exchequer, was presented as an overdue step towards democratising parliament. Critics suggested that a salaried parliament would produce a group of “professional whole-timers”.

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The Liberal Party had long advocated payment for MPs. But the issue was forced by the 1909 “Osborne Judgment”, which declared it illegal for trade unions to use their political levy to fund Labour MPs. The ruling threatened the financial viability of working-class representation in parliament.

The motion, introduced to parliament by Lloyd George on 10 August, read: “That, in the opinion of this House, provision should be made for the payment of a salary at the rate of four hundred pounds a year to every member of this House, excluding any member who is for the time being in receipt of a salary as an officer of the House, or as a minister, or as an officer of His Majesty’s Household.”

In his speech, Lloyd George argued that Britain possessed the “only parliament in the world” that did not provide financial support for its legislators.

He said: “Since [the Great Reform Act 1832] you have had a process of democratisation going on in the character of the members of this House. You have gradually broadened and broadened the basis not merely of representation, but of choice.

“In the old days we had practically only two classes here. We had the great county families and the legal profession, and we had odds and ends coming in; but, in the main, representation was confined to these two great classes.

“Since then you have brought in one class after another – the great middle class – the labouring population, and factory representation. I think everybody will agree that this process of broadening has raised the average of the House.”

Responding to likely objections to the measure, he added: “Where is the disgrace of making payment for faithful and honest service? Where does it degrade public life? How does it degrade public life?…

“Is the professional soldier less of a patriot than the volunteer? He is just as much of a patriot and a much better soldier.”

He said: “The only principle of payment in the public service is that you should make an allowance to a man to enable him to maintain himself comfortably and honourably, but not luxuriously, during the time he is rendering service to the state.”

Significantly, the chancellor framed his motion as conferring not a salary but an “allowance”.

He said: “When we offer £400 a year as payment to [MPs] it is not a recognition of the magnitude of the service, it is not a remuneration, it is not a recompense, it is not even a salary.

“It is just an allowance, and I think the minimum allowance, to enable men to come here… who would render incalculable service to the state… but who cannot be here because their means do not allow it.”

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The proposal was staunchly criticised by the Unionist opposition. Arthur Lee warned the motion would create a class of “paid professional politicians” – thus attracting undesirable characters and violating the “principle of gratuitous public service”.

Lee proposed an amendment to the motion which read: “This House declines to provide money for the payment of members of parliament, because such payment would be an indefensible violation of the principle of gratuitous public service, would involve the taxpayers in heavy and unnecessary expense, and would encourage a demand on the part of members of local bodies to be paid for their services, and further because, in the opinion of this House, there would be a peculiar impropriety in Members of Parliament voting salaries to themselves.”

Lee argued that the “change upon the public life of this country” brought by Lloyd George’s motion would “be even more marked and even more disastrous than the passage of the Parliament Bill itself”. On the very same day as MPs considered the government’s salary motion, peers relented in their opposition to the landmark Parliament Bill (later Act).

He said historians of the future would regard the reforms as marking a “black week” in British politics.

Lee predicted the “extinction” of the member “who is active and distinguished in other walks of life” and who serves out of “honour and a duty.”

Lee told MPs of his concerns: “I believe we will get a different type of member in this House from that which we have been used to.

“We will get a type of member and a much larger proportion of men, resembling the paid professional speakers of political parties today, and, while these men are able men and do good work, I do not believe they will be a satisfactory substitute for the present personnel of the House of Commons.”

He said: “We want to see in the House of Commons a microcosm of the nation, and the British people, we believe, prefers that its members of parliament should in large measure be men still engaged in the various callings of life rather than that they should be professional whole-timers in politics.”

Lee also criticised the “peculiar impropriety” of MPs voting salaries for themselves.

He concluded: “Above all, I object to it because I believe it will sound the death-knell of that system of voluntary service which has been the chief and unique glory of British public life.”

Ramsay MacDonald, the Labour leader in the commons, dismissed Lee’s “lugubrious” speech and his prophecy of what “the historian of the future” would say.

MacDonald declared: “I venture to say the country has not yet become so bankrupt in the production of good reliable historians that it will be incapable of producing men with an intelligence sufficiently penetrating to tell a totally different story from what the honourable gentleman outlined.”

Of the Osborne judgement, he argued that “this House neglected to do its duty” and unions were “driven by the sheer necessity of the circumstances… that the representative character of this House should be maintained.”

He claimed the existing system excluded “representative” people, limiting parliament to those who could “live on your wits by being a company promoter, a lawyer, a half-pay officer, the son of a rich father, or that rich father himself.”

The government motion passed by 265 votes to 173, with the support of Liberal and Labour MPs.

For the first time, Britain would produce and reproduce a salaried political class.

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Lee later became a staunch ally of Lloyd George during the latter’s tenure as minister of munitions and, subsequently, prime minister.

The Conservative and Liberal politicians first collaborated in the coalition government constructed in May 1915 under H. H. Asquith as prime minister. The coalition was Lloyd George’s initiative and formed against the backdrop of internal dissatisfaction with Asquith’s governing style and the prosecution of the war effort.

In his War Memoirs, Lloyd George described Lee as an “able critic of the policies in which I was concerned as a minister. I recognised his efficiency and intelligence as an opponent.”

He added: “I had on more than one occasion crossed swords with him in debate. He was a skilful swordsman, who gave few openings because he had the gift of both mastering his case thoroughly and presenting it forcibly.”

Lee served Lloyd George at the Ministry of Munitions from 1915 to 1916. They combined to support the introduction of conscription, which Asquith eventually accepted.

After defenestrating Asquith in December 1916, Lloyd George appointed Lee as director-general of food production.

Lloyd George, the prime minister from 1916 to 1922, later described Lee as a man of “manufacturing industry, great resource, and practical capacity.” The statesman wrote that he found Lee’s “understanding, his loyalty, and his courage of immeasurable support.”

In 1918, Lee was elevated to the peerage as Baron Lee of Fareham.

Lee later attended Lloyd George’s cabinet as minister of agriculture, fisheries and food (1919-1921) and first lord of the Admiralty (1921-1922).

In 1917, Lee and his wife, Ruth, donated Chequers – the country house and 1,000-acre estate they secured in 1909 – to the nation as a retreat for the prime minister. This endowment, formalised through the Chequers Estate Act 1917, established the property as the official country residence and retreat for successive British prime ministers.

The Lees vacated the estate in January 1921, after which Lloyd George became the first prime minister to make use of it. A formal dinner was held on 8 January 1921 to mark the official handover.

Lee was subsequently promoted within the peerage to Viscount Lee of Fareham.

Lloyd George stepped down as prime minister following the Conservative Party’s decision to withdraw from his coalition at a momentous Carlton Club meeting in October 1922.

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During the 1909 debate, Lloyd George sought to repel Lee’s criticisms – especially those regarding the creation of a salaried political class – by emphasising the term “allowance”. But the commons resolution referred unambiguously to a “salary”. As a result, the Inland Revenue initially taxed the full amount.

However, from 1912 a quarter (£100) was treated as tax-free expenses – creating an ambiguity whereby the £400 payment covered both pay and expenses. (Pay and expenses for MPs were only formally separated in 1971.)

The salary for MPs remained at £400 per annum until 1937, when it was increased to £600. But there were periods when salaries were temporarily reduced between 1931 and 1935, due to the surrounding economic crisis.

The salary was increased again in 1946 (to £1,000 per annum); 1957 (to £1,750); and 1964 (to £3,250), following the recommendations of an independent inquiry.

The Top Salaries Review Body (TSRB), established in 1971, ended the ad hoc revision of parliamentary salaries. The body was set up with a responsibility to advise the prime minister on appropriate remuneration.

The TSRB subsequently became the Senior Salaries Review Body (SSRB).

Responsibility for setting MPs’ pay transferred to the Independent Parliamentary Standards Authority (IPSA) in 2011. MPs had previously voted on salary recommendations produced by the SSRB; IPSA’s role means the salary-setting process is now entirely independent.