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This TL uses this thread - https://www.alternatehistory.com/discussion/showthread.php?t=261964 - as its starting point.

There are two PODs. The first is that the Liberals put up more candidates in the general election of 1924 than in OTL - 417 compared with 339. The absence of Liberal candidates benefitted the Conservatives more than Labour.

The second POD is that the Zinoviev Letter [1] was denounced by Ramsay MacDonald and ministers in his cabinet as a forgery.
'Civil War Plot by Socialists', announced a banner headline in the Daily Mail on October 25th. 'Moscow Order to our Reds. Great Plot Disclosed Yesterday.' 'A secret letter of instructions from Moscow to the British Communist Party', it reported, had come into the possession of the Daily Mail, which had sent copies to the other London papers. It was signed by Zinoviev, the President of the Communist International, and addressed to A. MacManus, the British representarive on the Comintern Executive. The letter was dated September 15th, and, the Daily Mail alleged, had been delivered to MacDonald and Henderson [the Home Secretary] 'some weeks ago'. On October 22nd, the Foreign Office had decided to make it public, together with a protest which the British Government had sent to the Boshevik charge s'affaires in London.
Quotation is taken from the book Ramsay MacDonald by David Marquand, London: Jonathan Cape Ltd, 1977.

Having ascertained from the Foreign Office that the Letter was a forgery, MacDonald denounced it in a speech in Cardiff on October 27th, he was followed by Arthur Henderson, Philip Snowden, John Clynes, James Thomas, Charles Trevelyan and Josiah Wedgwood.

Polling day was on Wednesday, October 29th. The first result was Salford South which was held by Labour. [2] As the results came in overnight and the next day, though the Conservatives were gaining seats from the Liberals, they were losing seats to Labour. After the final result was declared on October 31st, it was clear that no party had an overall majority. The number of candidates elected for each party, and Independents were as follows [1923 general election]:
Conservative: 298 [258]
Labour: 215 [191]
Liberal: 97 [158]
Communist: 1 [0]
Irish Nationalist: 1 [3]
Socialist Prohibition: 1 [1]
Independents: 2 [2, plus an Independent Liberal and a Christian Pacifist]. [3]
----------------------------
Total: 615 [615]
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The Independents elected were Dr. E.G.G. Graham-Little [London University] and A.Hopkinson [Lancashire Mossley]. The turnout was 78.3% [71.1%] [4]

The percentage votes were as follows [1923 general election]
Conservatives: 40.5 [38.0]
Labour: 34.7 [30.7]
Liberals: 23.9 [29.7]
Others: 0.9 [1.6]

Here is a breakdown of the number of seats gained and lost by each party compared with the 1923 general election:
Conservatives gained 65 seats and lost 25 seats, making a net gain of 40 seats. Labour gained 41 seats and lost 17 seats, making a net gain of 24 seats. The Liberals gained 9 seats and lost 70 seats, making a net loss of 61 seats. The Communists gained one seat. The Irish Nationalists lost two seats. The Independent Liberal and Christian Pacifist each lost one seat.

Labour bagged two big prizes - Herbert Asquith, the leader of the Liberal Party in Paisley, and Sir Oswald Mosley defeated Neville Chamberlain by 743 votes in Birmingham Ladywood. Also Malcolm MacDonald, the Prime Minister's son gained Bassetlaw for Labour from the Conservatives.

The cabinet met on November 3rd. The members are listed here: http://en.wikipedia.org/wiki/First_MacDonald_ministry.
The question to be decided was whether MacDonald should resign as Prime Minister in favour of Stanley Baldwin, or whether he and the government should stay in office and face a vote of confidence in the King's Speech. Parliament was due to assemble on December 2nd.

They unanimously decided that they stay in office, and also to offer the Liberals a pledge in the King's Speech a Bill to provide for elections to the House of Commons by the Single Transferable Vote. The Labour Whips would allow a free vote to Labour MPs for the second reading of the Bill, but if it passed its second reading, the government would allow it time.

[1] For the Zinoviev Letter see http://www.jstor.org/stable/260155.

[2] In OTL this was a Conservative gain from Labour.

[3] Strictly speaking the table should include six candidates elected as Constitutionalists, of which two [including Winston Churchill] would sit as Conservatives, and four as Liberals and whose names appeared on the official list of Liberal candidates.

[4] In OTL the turnout in the 1924 general election was 77.0%.
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