Preheat oven to 180 degrees C. Grease and flour an 20cm square pan. Make topping by mixing 1/4 cup sugar and 1/2 teaspoon cinnamon with 1 tablespoon butter. Set aside.
In a large bowl mix flour, baking powder and 1/2 cup sugar. Cut in margarine to a fine grain. In a separate small bowl beat egg, then pour in milk and mix together. Beat into dry mixture with minimum of strokes.
Spread batter into prepared pan and sprinkle with topping. Bake in the preheated oven for 20 to 25 minutes, or until a skewer inserted into the centre of the cake comes out clean. Serve warm.