In the January 1906 general election, the Liberals obtained a majority of over 200 seats. Such a majority was almost three times the size of the Irish Parliamentary Party membership in parliament, which meant that the Liberals did not need the Irish votes and could put Home Rule very much on the back burner. The most significant gesture to the Irish was the passage in 1908 of an Irish Universities Act, which ended the old Royal University (a purely examining body), established a new National University that included the old Queens Colleges of Cork and Galway (now to be known as University College Cork and University College Galway) and the Catholic University College Dublin, and transformed Queens College Belfast into Queens University, Belfast. The National University was de facto, if not de jure, Catholic. Another gesture to the Irish, an Irish Councils Bill, which would give some authority to a local council that would be partly elected and partly appointed and would direct some branches of Irish administration, was rejected by the Irish Parliamentary Party as a diversion from the central objective of Home Rule.
The Liberal government committed itself to other significant reforms, including old age pensions and labor exchanges for the unemployed, as well as naval rearmament to match a perceived German threat to British maritime supremacy. All these cost money, which prompted a budget with severely progressive taxation, especially on landed wealth. The Conservative-dominated and hereditary House of Lords rejected the budget. The government, headed by H. H. Asquith, went to the people in calling an election in 1910. The Liberals anticipated an overwhelming victory in casting the election as a battle between the proponents of democracy against the defenders of hereditary privilege and in which a Liberal victory could be followed by legislation restraining the veto power of the upper house.
Amazingly, the results were a virtual tie, with the Liberals getting 275 seats to the 273 for the Conservative-Unionists, which put Redmond and his contingent of 71 in a position to make or break the government. (The new Labour Party held 40 seats.) Rather than accept a situation in which the Irish would determine the government, and using the pretext that the new king (George V had succeeded his father Edward VII in May 1910) should not have to contend with such a constitutional crisis so early in his reign, a series of private meetings were held between the Liberals and Conservatives for almost half a year seeking alternatives, including a national coalition government. However, any potential agreement failed on the issue of what to do about Ireland. It was therefore decided to go to the voters again in December for a clearer mandate one way or the other. This time the two major parties secured exactly the same number of seats, 273, while Labour increased to 42, and the Irish won 83. This meant that the Liberals would need the Irish votes to form a government and to pass legislation limiting the Lords' veto power. But if limitations were placed on the Lords' veto, then the passage of a Home Rule measure would follow in due course.
The overwhelming majority of the upper house resisted the proposed restriction on their veto power, but they yielded when confronted with the threat of the king employing his prerogative to appoint a sufficient number of new peers as to guarantee the measure's passage. Enough lords were concerned enough about the exclusivity of their house so as to "hedge" and accept the reform in contrast to the determined minority wishing to fight to the end in the "ditch" for the full powers of their chamber. The measure stated that any bill passed three years in succession by the House of Commons would become law upon the king's signature regardless of the position of the House of Lords. Subsequently, a Home Rule bill was introduced in 1912, which ought to have been certain of being the law by 1914. The measure called for a two-house Irish parliament, a popularly elected lower house and an appointed upper house, and a reduced Irish representation in the House of Commons at Westminster. The sovereignty of the Irish parliament would be restricted, as the British government would retain control over the police for six years, over defense and foreign policy, and over excise and customs revenues permanently. Nor could the Irish parliament legislate on religious matters.