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, with Lord Inchcape, Lord Faringdon, Sir Joseph Maclay and Sir Guy Granet as the other members.
During and after the Great War, government expenditure and taxation increased. Taxation per head per annum was ã18 in 1919; ã22 in 1920; and ã24 in 1921. In 1913–14 the Civil Services and Revenue Departments cost ã81.3 million; in 1920âÂÂ21 they cost ã523.3 million; and in 1921–22 they cost ã590.7 million. The Armed Forces cost around ã77 million in the year before the War and approaching ã190 million in 1921–22. Similarly, the National Debt and other Consolidated Fund Services increased over the same time from ã37.3 million to ã359.8 million.
In 1921, the Anti-Waste League was formed by Lord Rothermere to campaign against what it considered to be wasteful government expenditure. 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 stating that, in 1921–22, the cost of Supply Services would be ã603 million, which should be reduced in the next financial year to ã490 million—economies totalling ã113 million. However, the response was a plan to reduce this expenditure by only ã75 million. The Prime Minister, David Lloyd George, appointed Geddes as head of a committee in August 1921 to find where cuts could be found in various government departments for 1922–23. The committee's terms of reference were:
<blockquote>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.</blockquote>
Sometime after its appointment, the Chancellor, Sir Robert Horne, requested that the committee find how expenditure could be reduced by ã175 million, which meant a total expenditure of ã428 million. The committee's reports were shown to the Cabinet in December 1921 and January 1922. Cabinet committees reviewed and modified them before publication in February. Three Reports were published:
The Reports advocated economies totalling ã87 million, but the Cabinet decided on savings amounting to ã52 million. Total defence expenditure fell to ã111 million in 1922–23 from ã189.5 million in 1921–22, and total social spending (education, health, housing, pensions, unemployment) fell from ã205.8 million in 1920–21 to ã182.1 million in 1922–23.
After 1922–23, defence spending increased to ã114.7 million in 1924–25, and social spending, after dipping to ã175.5 million in 1923–24, increased to ã177.4 million in 1924–25.
Geddes Axe may have been the first use of the term axe as a metaphor for financial cuts. The earliest citations in the Oxford English Dictionary for axe used in that sense are all in the context of the Geddes Axe. The very earliest use identified was in the Glasgow Herald in October 1922. It was also used in The Times in March 1923 in an article concerning the limit of safety of army cuts: "No fewer than 1,500 officers had fallen before the Geddes axe."
For a time, the term Geddes Axe became a metaphor for any change that improved efficiency or increased simplicity. For instance, Rupert Gould in The Marine Chronometer (1923) wrote,