Grease and flour a 9x9x2-inch baking pan. Set aside.
In a medium bowl, mix flour, sugar, baking powder, salt and nutmeg. Using a pastry blender, cut in the 1/4 cup butter until mixture resembles coarse crumbs. Make a well in center of flour mixture. In a small bowl, combine egg and milk. Add egg mixture all at once to flour mixture. Stir just until moistened (batter should be lumpy).
Spread batter into prepared pan. Halve any large peach slices. Arrange peach slices in a single layer on top of batter.
For topping, in a small saucepan, combine brown sugar, corn syrup, the 1 tablespoon butter and the lemon juice. Bring to boiling. Quickly drizzle over peach slices.
Bake in a 350 degree F oven for 40 to 45 minutes or until a toothpick inserted in the center of cake comes out clean. Cool in pan on wire rack 20 minutes. serve warm with ice cream. Makes 9 servings.