Wood was important to the British war effort both as Secretary of State for Air and as Chancellor of the Exchequer. As Secretary of State for Air from May 1938 until April 1940, Wood at least doubled the effective fighting strength of the Royal Air Force. He was then appointed Lord Privy Seal and advised Neville CHAMBERLAIN to resign in May. Under CHURCHILL Wood was Chancellor of the Exchequer and member of the War Cabinet until February 1942, when it was reshuffled following the loss of Singapore. Under the influence of John Maynard Keynes, Wood consciously used the Budget as a major instrument in running the war economy. In 1940 he ordered that income tax should be compulsorily deducted at source. His 1941 Budget raised income tax to the new high rate of IOS in the pound, reduced the tax exemption limit to £110 bringing in 2,000,000 new tax-payers, and assuaged tempers by declaring a part of the increase to be war credits, to be reclaimed after the war thus inaugurating a system of compulsory savings. These measures, plus a stringent price control policy kept the cost of living to within 30% above the 1939 level. Wood died suddenly on 21 September 1943 just as he was about to announce a ‘Pay-As-You- Earn’ scheme which his successor, ANDERSON, implemented.