After the appointment of Baldwin as prime minister, Davidson entered the government as Chancellor of the Duchy of Lancaster, and effectively continued as the prime minister's private secretary. However, he lost his seat in parliament at the general election of December 1923, but regained it already in the general election in October the following year. Baldwin once again formed an administration after the brief first-ever 1924 Labour government, and made Davidson Parliamentary and Financial Secretary to the Admiralty. In this post he was forced to deal with cuts in naval expenditure proposed by the Chancellor of the Exchequer, Winston Churchill, especially regarding the construction of new cruisers. He served as deputy chief civil commissioner during the general strike of 1926, with responsibility for publicity. He also managed the short-lived "British Gazette" during the strike and arranged for the broadcasting of official bulletins.