Because it was already a national government and Ramsay MacDonald formed the national Labour party after being forced out from Labour.

MacDonald had problems with his Labour government because he couldn't force cuts without having important people resign, so he resigned himself. The king then asked him to form a national government to keep thing stable. That is why MacDonald was in the national Labour party, not the 'real' one.

The National government, a bit like the war time government, and was an alliance of parties who fought the election on the grounds of keeping the national government, and votes deciding the seats. McDonald was PM of the alliance which was the National Government but due to being in a small splinter party he didn't have very many MPs supporting him. So despite his large mandate he did not have much power because he did not have very many allies, also at the same time the 'main' Labour party lost many seats making the Liberals and Conservative stronger.

Most of MacDonald's ex-Labour colleages considered him a traitor and would not help support him.

Sources: Minutes and papers of the Labour party (also Independent Labour party and the Representation Committee), Hansards, MacDonald's personal papers, writings and correspondence, period newspapers, being a Labour party members myself and studying British politics as part of my History degree. A familiarity with British parliamentary processes.

I don't have books and journals to hand right now for publishing dates but Essays in Labour History is a good place to start. And there are plenty of journal articles and biographies of poeple like MacDonald and Henderson.

Hansards can be searched through here

https://hansard.parliament.uk/

Some of MacDonalds papers are available through the national archive or at the University of Manchester.