Geddes Axe
Encyclopedia
The Geddes Axe was the drive for public economy and retrenchment
in UK government expenditure recommended in the 1920s by a Committee on National Expenditure chaired by Sir Eric Geddes and with Lord Inchcape
, Lord Faringdon
, Lord Maclay
and Sir Guy Granet
also members.
government expenditure and taxation increased. Taxation per head per annum was £18 in 1919; £22 in 1920; and £24 in 1921. In 1913–14 the Civil Services and Revenue Departments cost £81.3 million; in 1920-21 they cost £523.3 million; and in 1921–22 they cost £590.7 million. The Armed Forces
cost around £77 million in the year before the War and approaching £190 million in 1921–22. Similarly, the National Debt and other Consolidated Fund Services increased over the same time from £37.3 million to £359.8 million.
In 1921 the Anti-Waste League
was formed by Lord Rothermere to campaign against what they considered wasteful government expenditure, and three of its candidates won by-elections from government supporters between February and June 1921. In May 1921 HM Treasury
sent all government departments a circular citing that in 1921–22 the cost of Supply Services would be £603 million and that this should be reduced in the next financial year to £490 million—economies totalling £113 million. Instead the response was a plan to reduce this expenditure by £75 million. The Prime Minister
David Lloyd George
appointed Geddes as head of a committee in August 1921 to find where economies could be found in various government departments for 1922–23. The committee's terms of reference were:
Sometime after its appointment the Chancellor Sir Robert Horne
requested that the committee find where expenditure could be reduced by £175 million, which meant total expenditure down to £428 million. The committee's reports were shown to the Cabinet in December 1921 and January 1922, where Cabinet committees reviewed and modified them before publication in February. Three Reports were published:
Retrenchment
Retrenchment is an act of cutting down or reduction, particularly of public expenditure.-Political usage:The word is familiar in this, its most general sense, from the motto of the Gladstonian Liberal party in British politics, "Peace, Retrenchment and Reform."The manifesto for 1906 Liberal...
in UK government expenditure recommended in the 1920s by a Committee on National Expenditure chaired by Sir Eric Geddes and with Lord Inchcape
James Mackay, 1st Earl of Inchcape
James Lyle Mackay, 1st Earl of Inchcape, GCSI, GCMG, KCIE was a British colonial administrator in India.Mackay was the second son of James Mackay of Arbroath and his wife, Deborah Lyle...
, Lord Faringdon
Alexander Henderson, 1st Baron Faringdon
Alexander Henderson, 1st Baron Faringdon, CH , known as Sír Alexander Henderson, 1st Baronet, from 1902 to 1916, was a British financier and Liberal Unionist Member of Parliament.- Biography :...
, Lord Maclay
Joseph Maclay, 2nd Baron Maclay
Joseph Paton Maclay, 2nd Baron Maclay KBE , was a Scottish, banker, shipowner, peer and Liberal politician.-Family and education:...
and Sir Guy Granet
Guy Granet
Sir William Guy Granet, GBE trained as a barrister but became a noted railway administrator, first as general manager of the Midland Railway then as a director-general in the War Office.-Biography:...
also members.
Background
During and after the Great WarWorld War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
government expenditure and taxation increased. Taxation per head per annum was £18 in 1919; £22 in 1920; and £24 in 1921. In 1913–14 the Civil Services and Revenue Departments cost £81.3 million; in 1920-21 they cost £523.3 million; and in 1921–22 they cost £590.7 million. The Armed Forces
British Armed Forces
The British Armed Forces are the armed forces of the United Kingdom of Great Britain and Northern Ireland.Also known as Her Majesty's Armed Forces and sometimes legally the Armed Forces of the Crown, the British Armed Forces encompasses three professional uniformed services, the Royal Navy, the...
cost around £77 million in the year before the War and approaching £190 million in 1921–22. Similarly, the National Debt and other Consolidated Fund Services increased over the same time from £37.3 million to £359.8 million.
In 1921 the Anti-Waste League
Anti-Waste League
The Anti-Waste League was a political party in the United Kingdom, founded in 1921 by Lord Rothermere.The formation of the League was announced in a January 1921 edition of the Sunday Pictorial with Rothermere attacking what he saw as government waste during a time of recession. As such the party...
was formed by Lord Rothermere to campaign against what they considered wasteful government expenditure, and three of its candidates won by-elections from government supporters between February and June 1921. In May 1921 HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...
sent all government departments a circular citing that in 1921–22 the cost of Supply Services would be £603 million and that this should be reduced in the next financial year to £490 million—economies totalling £113 million. Instead the response was a plan to reduce this expenditure by £75 million. The Prime Minister
Prime Minister of the United Kingdom
The Prime Minister of the United Kingdom of Great Britain and Northern Ireland is the Head of Her Majesty's Government in the United Kingdom. The Prime Minister and Cabinet are collectively accountable for their policies and actions to the Sovereign, to Parliament, to their political party and...
David Lloyd George
David Lloyd George
David Lloyd George, 1st Earl Lloyd-George of Dwyfor OM, PC was a British Liberal politician and statesman...
appointed Geddes as head of a committee in August 1921 to find where economies could be found in various government departments for 1922–23. The committee's terms of reference were:
To make recommendations to the Chancellor of the ExchequerChancellor of the ExchequerThe Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...
for effecting forthwith all possible reductions in the National Expenditure on Supply Services, having regard especially to the present and prospective position of the Revenue. Insofar as questions of policy are involved in the expenditure under discussion, these will remain for the exclusive consideration of the Cabinet; but it will be open to the Committee to review the expenditure and to indicate the economies which might be effected if particular policies were either adopted, abandoned or modified.
Sometime after its appointment the Chancellor Sir Robert Horne
Robert Horne, 1st Viscount Horne of Slamannan
Robert Stevenson Horne, 1st Viscount Horne of Slamannan GBE, PC, KC was a Scottish businessman, advocate and Unionist politician. He served under David Lloyd George as Minister of Labour between 1919 and 1920, as President of the Board of Trade between 1920 and 1921 and as Chancellor of the...
requested that the committee find where expenditure could be reduced by £175 million, which meant total expenditure down to £428 million. The committee's reports were shown to the Cabinet in December 1921 and January 1922, where Cabinet committees reviewed and modified them before publication in February. Three Reports were published:
- First Interim Report of Committee on National Expenditure. (Cmd. 1581. Pp. 172.)
- Second Interim Report of Committee on National Expenditure. (Cmd. 1582. Pp. 113.)
- Third Interim Report of Committee on National Expenditure. (Cmd. 1589. Pp. 170.)
The Axe
The Reports advocated economies totalling £87 million; the Cabinet decided on savings amounting to £52 million. Total defence expenditure fell to £111 million in 1922–23 from £189.5 million in 1921–22; total social spending (education, health, housing, pensions, unemployment) fell from £205.8 million in 1920–21 to £182.1 million in 1922–23. After 1922–23 defence spending increased to £114.7 million in 1924–25, and social spending—after dipping to £175.5 million in 1923–24—increased to £177.4 million in 1924–25.Further reading
- Henry Higgs, 'The Geddes Reports and the Budget', The Economic Journal, Vol. 32, No. 126. (Jun., 1922), pp. 251–264.
- Andrew McDonald, 'The Geddes Committee and the Formulation of Public Expenditure Policy', 1921–1922, The Historical Journal, Vol. 32, No. 3 (Sep., 1989), pp. 643–674.
- Peter K. Cline, 'Eric Geddes and the 'Experiment' with Businessmen in Government, 1915–1922', in Kenneth D. Brown (ed.), Essays in Anti-Labour History (London: Macmillan, 1974), pp. 74–104.