13: Response to the economic crisis part 2

Question 1

What did Macdonald appoint to make recommendations in response to the Liberals proposal?

Answer 1

The May Committee

Question 2

Who chaired the May Committee?

Answer 2

Sir George May ( the secretary of the Prudential Insurance Company)

Question 3

When was the May report published?

Answer 3

31 July 1931

Question 4

What did the May report predict?

Answer 4

A budget deficit of £120 million by 1932 unless severe cuts were made

Question 5

What did the May report recommend? (4)

Answer 5

• £96.5 million cuts
• Pay cuts for public sector workers like teachers and policemen
• 20% cut in unemployment benefits
• Heavier tax

Question 6

Why is the May report now seen as controversial?

Answer 6

It exaggerated the budget deficit which meant that the situation looked much worse for the government than it actually was

Question 7

How did the two Labour members of the committee respond to the May report?

Answer 7

They disagreed with its proposals and produced their own minority report but were ignored

Question 8

Why did many Labour party members and trade unionists disagree with the May report recommendations? (2)

Answer 8

• They wanted the government to find money by taxing the rich more heavily rather than cutting government spending at the expense of the unemployed
• Some believed the crisis was a good thing as if capitalism collapsed then the way would be clear for socialism

Question 9

How did MacDonald respond to the May report? (3)

Answer 9

• Felt compelled to follow the broad guidelines of the report
• Favoured tax increase (increased income tax in 1930)
• He accepted that a reduction in unemployment benefit was the price the party had to be prepared to pay

Question 10

Who were the members of the Cabinet Economy Committee and when did they meet? (5)

Answer 10

• MacDonald
• Henderson
• J.H.Thomas
• Snowden
• 12 August 1931

Question 11

What did the Cabinet Economy Committee agree to and when? (2)

Answer 11

• 19 August 1931

- cuts of £56 million

Question 12

What did the TUC leaders think and what effect did this have? (3)

Answer 12

• Rejected any cuts that affected the unemployed
• Rejected the May Committee’s proposals entirely
• It put pressure on the Labour cabinet

Question 13

When did the cabinet finally vote to substantially cut unemployment benefits and what were the results? (2)

Answer 13

• Sunday 23 August 1923

- 11 to 9 votes

Question 14

What was the effect of the vote?

Answer 14

It split the party so badly that MacDonald went to resign on the 24th of August