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The May Report, within the
economic history of the United Kingdom The economic history of the United Kingdom relates the economic development in the British state from the absorption of Wales into the Kingdom of England after Laws in Wales Acts 1535 and 1542, 1535 to the modern United Kingdom, United Kingdom o ...
, was a publication on 31 July 1931 by the Committee on National Expenditure ("May Committee"). The May Committee was set up to suggest ways for the government to curb expenditure after a proposal by a Liberal MP. The committee was chaired by Sir George May. Its main conclusions were extensive public sector spending cuts, including a cut to the unemployment benefit, and increased taxation.


Background

The Depression had hit the UK in 1931, and had led to a run on the Bank of England in which foreign investors were withdrawing £2.5 million a day in gold. As most of the Labour party was opposed to the
Keynesian Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output a ...
ideas proposed by
Oswald Mosley Sir Oswald Ernald Mosley, 6th Baronet (16 November 1896 – 3 December 1980) was a British politician during the 1920s and 1930s who rose to fame when, having become disillusioned with mainstream politics, he turned to fascism. He was a member ...
, the government was looking for some way to cut public sector spending. The Liberal MP Sir Donald Maclean proposed a House of Commons resolution under which the committee would be appointed. This was accepted by the Labour Chancellor of the Exchequer
Philip Snowden Philip Snowden, 1st Viscount Snowden, PC (; 18 July 1864 – 15 May 1937) was a British politician. A strong speaker, he became popular in trade union circles for his denunciation of capitalism as unethical and his promise of a socialist utop ...
, who set up the Committee in February 1931.


Report

The Report was the conclusions of the majority of the Committee, the Liberal nominees Sir Mark Jenkinson and Lord Plender, and the Conservatives' nominees Sir Thomas Royden and Cooper, all with experience in finance. The two Labour nominees, trade unionists Arthur Pugh and Charles Latham, dissented from the Report. The Report calculated that the deficit for 1932-3 would be £120 million. They believed that taxation already consumed "an unduly large proportion of the national income" and therefore the deficit could only be cured by retrenchment in public expenditure, because such expenditure which was "definitely restrictive of industrial enterprise and employment". They put forward wage cuts for the police, teachers and pre-1925 entrants to the armed forces. Most economies were recommended to be made in the social services and public work schemes because, the Report argued, if the country survived without them a few years previously then they "cannot be essential". The total economies they proposed amounted to £96.5 million, with the largest economy being unemployment insurance at £66.5 million. This included a 10% cut to the unemployment benefit. Which the Labour cabinet voted to accept by 11 to 9, on August 28th 1931. The two Labour nominees wrote their own Report which blamed the economic difficulties on deflationary policies and accepted limited wage cuts but believed that the "equitable" solution would be to raise taxes on holders of National Debt and other investments with fixed interests.


Response

In response to the Report the Cabinet appointed an economy committee with the
Prime Minister A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister is n ...
Ramsay MacDonald James Ramsay MacDonald (; 12 October 18669 November 1937) was a British politician who served as Prime Minister of the United Kingdom, the first who belonged to the Labour Party, leading minority Labour governments for nine months in 1924 ...
, Snowden,
Foreign Secretary The secretary of state for foreign, Commonwealth and development affairs, known as the foreign secretary, is a minister of the Crown of the Government of the United Kingdom and head of the Foreign, Commonwealth and Development Office. Seen as ...
Arthur Henderson Arthur Henderson (13 September 1863 – 20 October 1935) was a British iron moulder and Labour politician. He was the first Labour cabinet minister, won the Nobel Peace Prize in 1934 and, uniquely, served three separate terms as Leader of t ...
,
Lord Privy Seal The Lord Privy Seal (or, more formally, the Lord Keeper of the Privy Seal) is the fifth of the Great Officers of State (United Kingdom), Great Officers of State in the United Kingdom, ranking beneath the Lord President of the Council and abov ...
James Henry Thomas James Henry Thomas (3 October 1874 – 21 January 1949), sometimes known as Jimmy Thomas or Jim Thomas, was a Welsh trade unionist and Labour (later National Labour) politician. He was involved in a political scandal involving budget leaks ...
and
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William Graham as its members.Taylor, p. 288, n. 3. Although the first meeting of this committee was due to meet on 25 August, MacDonald's holiday was interrupted on 11 August by a message from bankers that there was a run on the pound. The whole Cabinet discussed what to do from 20 August until on 24 August they could not reach a consensus on whether to cut unemployment benefits to ensure a balanced budget. Nine Cabinet members would resign if this was carried through, with the rest (11) not dissenting. The acting leader of the Liberals,
Herbert Samuel Herbert Louis Samuel, 1st Viscount Samuel, (6 November 1870 – 5 February 1963) was a British Liberal politician who was the party leader from 1931 to 1935. He was the first nominally-practising Jew to serve as a Cabinet minister and to beco ...
, suggested a National Coalition Government headed by MacDonald, with Conservative leader
Stanley Baldwin Stanley Baldwin, 1st Earl Baldwin of Bewdley, (3 August 186714 December 1947) was a British Conservative Party politician who dominated the government of the United Kingdom between the world wars, serving as prime minister on three occasions, ...
agreeing. Therefore, on 24 August a National Government headed by MacDonald came into being, a consequence of which was to split the Labour Party.


Notes

{{reflist Great Depression in the United Kingdom Economic history of the United Kingdom 1931 in the United Kingdom July 1931 events 1931 in British politics