Butler deputized as prime minister for Churchill during his illness in the early 1950s, but lost the contest to succeed Anthony Eden as party leader and prime minister to Harold Macmillan in 1957. Historians have attributed this both to his having been too closely associated with the faction favouring appeasement in the 1930s, and to his having delivered an imprudently loose budget earlier that year thereby damaging the reputation he had established for skilled economic management.
When Macmillan retired as party leader and prime minister in 1963, his actions were widely seen as having operated to block Butler's succession to these offices and occasioned lasting bitterness from Butler's supporters, though Butler himself accepted office in the new cabinet of Alec Douglas-Home.
After his retirement from political office he served as Master of Trinity College, Cambridge.
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