Geddes Axe

The Geddes Axe was the drive for public economy and retrenchment in government expenditure recommended by a Committee on National Expenditure chaired by Sir Eric Geddes and with Lord Inchape, Lord Faringdon, Sir Joseph Maclay and Sir Guy Granet also members.

Background

During and after the Great War government expenditure and taxation increased. Taxation per head per annum was £18 in 1919; £22 in 1920; and £24 in 1921. [Henry Higgs, 'The Geddes Reports and the Budget', "The Economic Journal", Vol. 32, No. 126. (Jun., 1922), p. 252.] In 1913-14 the Civil Services and Revenue Departments cost £81.3 millions; in 1920-21 they cost £523.3 millions; and in 1921-22 they cost £590.7 millions. The Armed Forces cost around £77 millions in the year before the War and approaching £190 millions in 1921-22. Similarly, the National Debt and other Consolidated Fund Services increased over the same time from £37.3 millions to £359.8 millions. ["Ibid."]

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 millions and that this should be reduced in the next financial year to £490 millions—economies totalling £113 millions. Instead the response was a plan to reduce this expenditure by £75 millions. ["Ibid.", pp. 252-3.] 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. [John Ramsden (ed.), "The Oxford Companion to Twentieth Century British Politics" (Oxford: Oxford University Press, 2005), p. 23.] The committee's terms of reference were:

To make recommendations to the Chancellor of the Exchequer 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. [Higgs, p. 253.]

Sometime after its appointment the Chancellor Sir Robert Horne requested that the committee find where expenditure could be reduced by £175 millions, which meant total expenditure down to £428 millions. ["Ibid."] 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. [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), p. 101.] 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 millions; the Cabinet decided on savings amounting to £52 millions. [Ramsden, p. 264.] Total defence expenditure fell to £111 millions in 1922-23 from £189.5 millions in 1921-22; total social spending (education, health, housing, pensions, unemployment) fell from £205.8 millions in 1920-21 to £182.1 millions in 1922-23. After 1922-23 defence spending increased to £114.7 millions in 1924-25, and social spending—after dipping to £175.5 millions in 1923-24—increased to £177.4 millions in 1924-25. [George Peden, "The Treasury and British Public Policy: 1906-1959" (Oxford: Oxford University Press, 2000), p. 169.]

Notes

Further reading

* [http://links.jstor.org/sici?sici=0013-0133%28192206%2932%3A126%3C251%3ATGRATB%3E2.0.CO%3B2-A Henry Higgs, 'The Geddes Reports and the Budget', "The Economic Journal", Vol. 32, No. 126. (Jun., 1922), pp. 251-264] .
* [http://links.jstor.org/sici?sici=0018-246X(198909)32%3A3%3C643%3ATGCATF%3E2.0.CO%3B2-W 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.