Sift the dry ingredients together and mix in the butter with fingers till it resembles breadcrumbs. Mix egg and milk and add to above. Boil water (must be about 2 inches deep) with a pinch of salt in a casserole with a lid. Use a teaspoon dipped in boiling water to put spoonfuls of the dough into the boiling water. Cover with tight fitting lid and cook slowly for 10 minutes (don't peek, as this will cause the dumplings to deflate and become rubbery). Remove from heat. With a slotted spoon, remove from cooking liquid and put into a serving bowl. Put dots of butter on top. Sprinkle a lot of cinnamon sugar over and serve with vanilla custard.
Make the Vanilla Custard Sauce: Beat all the ingredients well together. Put in a small saucepan over low heat and cook, whisking constantly until it thickens; but do not allow it to boil, or it will instantly curdle.