His ministers rapidly faced the problems stemming from the impact of the Great Depression, having to reconcile budgetary considerations with the demands of trade unions.

In particular, unemployed workers' organisations carried on regular and massive protest actions, including a series of hunger marches.

[1] The act introduced a philanthropic cartel replacing the coal merchants' oligopoly to allocate production quotas by control of a central council, while a Mines Reorganisation Commission was established to encourage efficiency through amalgamations.

[9] Expenditure on the insurance fund was raised as a means of ensuring that unemployed persons would not be reduced so quickly to poor relief.

5. c. 16) re-drafted the terms of benefit, so as to remove the major part of the grievance relating to the disqualification of persons alleged to be "not genuinely seeking work", which led to greater numbers of people acquiring unemployment assistance.

5. c. 43) (which introduced third-party insurance to compensate for property damage and personal injury, made better provisions for road safety,[12] provided greater freedom to municipalities to run omnibus services, the principle of the Fair Wage Clause was applied to all employees on road passenger services, and placed a statutory limit on the working hours of drivers[3]), the Land Drainage Act[which?

passed by the previous Conservative government providing assistance towards the improvement of privately owned cottages for land workers was extended for another five years.

[15] Various military reforms were carried out, with the raising of the minimum age of enrolment into Officers' Training Corps from 13 to 15, the abolition of the death penalty for certain offences, and the modification of the disciplinary code "in the direction of clemency.

5. c. 5) extended provision of health insurance to unemployed males whose entitlement had run out, while the Poor Prisoners' Defence Act 1930 (20 & 21 Geo.

5. c. 39) provided local authorities with additional central government subsidies to construct new homes for people who had been moved out of slum clearance areas.

[25] George Lansbury, the First Commissioner of Works, sponsored a "Brighter Britain" campaign and introduced a number of facilities in London parks such as mixed bathing, boating ponds,[26] and swings and sandpits for children.

[28] The Lord Privy Seal J. H. Thomas, who was put in charge of the problem of unemployment, was unable to offer a solution,[29] while Margaret Bondfield also failed to come up with an imaginative response.

George Lansbury proposed land reclamation in Great Britain, a colonising scheme in Western Australia, and pensions for people at the age of sixty, while Tom Johnston pushed for national relief schemes such as the construction of a road round Loch Lomond (Johnston was successful in getting a coach road from Aberfoyle to the Trossachs rebuilt).

[31] The one minister whose proposals may have helped Britain to recover quickly from the worst effects of the Great Depression was Oswald Mosley, a former member of the Conservative Party.

These included much greater use of credit to finance development through the public control of banking, rationalisation of industry under public ownership, British agricultural development, import restrictions and bulk purchase agreements with foreign (particularly Imperial) producers, protection of the home market by tariffs, and higher pensions and allowances to encourage earlier retirement from industry and to increase purchasing power.

The government continued to adhere to an orthodox economic course,[28] as characterised by the controversial decision of the Minister of Labour Margaret Bondfield to push through Parliament an Anomalies Act,[clarification needed] aimed at stamping out apparent "abuses" of the unemployment insurance system.

This legislation limited the rights of short-time, casual and seasonal workers and of married women to claim unemployment benefit, which further damaged the reputation of the government amongst Labour supporters.

[33] In the summer of 1931, the government was gripped by a political and financial crisis as the value of the pound and its place on the Gold Standard came under threat over fears that the budget was unbalanced.

A run on gold began when a report by the May Committee estimated that there would be a deficit of £120 million by April 1932, and recommended reductions in government expenditure and higher taxes to prevent this.

[29] MacDonald's cabinet met repeatedly to work out the necessary cutbacks and tax rises, while at the same time seeking loans from overseas.

It later became clear that the bankers in New York would only provide loans if the government carried out significant austerity measures, such as a 10% reduction in the dole.

During August 1931, the Cabinet struggled to produce budget amendments that were politically acceptable but proved unable to do so without causing mass resignations and a full-scale split in the party.

The particular issue on which the split occurred was the vote of the cabinet after much discussion to reduce benefit paid to unemployed people under the National Assistance scheme.

The Cabinet was unable to reach an agreement on this controversial issue, with nine members opposing the reduction in the dole and eleven supporting it, and on 24 August 1931 the government formally resigned.