Contingencies Fund Bill

(Limited Text - Ministerial Extracts only)

Committee stage & 2nd reading & 2nd reading: House of Commons & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Tuesday 24th March 2020 Commons Chamber

[The Financial Secretary to the Treasury (Jesse Norman)]

I beg to move, That the Bill be now read a Second time.

As the House knows, we are living in unprecedented times. The Government have made it clear that they will do whatever it takes to mitigate and limit the effects of the covid-19 pandemic on the United Kingdom. To that end, we have a coherent, co-ordinated and comprehensive plan to support public services, equipping our doctors, nurses and other essential staff with the tools they require on the frontline in support of their work. It is a plan to protect businesses, jobs, wages and incomes through this difficult and uncertain period for the economy. At the heart of the Bill is a recognition that the Government must act swiftly and boldly to provide the resources necessary to limit, and ultimately defeat, the virus.

As the House knows, Parliament provides the Government with the authority to expend resources, capital and cash via the supply process. The process is begun with the publication of the main supply estimates, which we debate in this Chamber, and then the introduction of a supply and appropriation Bill. It is only once that Bill receives Royal Assent, usually in July, that Governments get the bulk of their resources, capital and, most importantly, cash to carry out their approved functions. Until the supply Bill passes, typically in July, Departments live on what is described as “vote on account” money. This money usually represents about 45% of the departmental spending on services from the previous year. It allows Departments to start spending from 1 April, and it normally provides sufficient funds to tide them over until the balance is delivered via the supply Act in July, as described. However, as events have been unfolding, it has become clear that additional departmental spending will be needed compared to last year, and for good reason. The scale and spread of the virus mean that we must act now to safeguard lives. The Government cannot afford to wait. No one in this House would want us to wait until July to deliver the resources that Departments need for the next financial year.

[Sir Desmond Swayne (New Forest West) (Con)]

The Bill is necessary because the economy has come to a halt; we have effectively halted it in order to put an end to this virus. There is a narrative that actually we could have toughed it out, and that we have sacrificed the economy for healthcare. That never really was a realistic alternative, was it?

[Jesse Norman]

The Government have not had any time for that narrative, nor has there been any decision in our mind other than to act as decisively, effectively and comprehensively as we can to defeat this virus and to protect livelihoods, businesses, jobs and wellbeing. That is what we are seeking to do. I do not agree—if I may say so to my right hon. Friend—that the requirements that this Bill seeks to address would or could have been accommodated in any other economic circumstances. To move at the speed at which we are moving to offer the support we are offering demands the cash movement that this Bill is designed to achieve.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

Can the Minister confirm that the amounts that we are talking about in this Bill relate to departmental spending that may need to happen over the next few months, and that they do not relate to the balance sheet of the Bank of England or any of the lending facilities that have been made available to business?

[Jesse Norman]

The right hon. Gentleman is absolutely right. This legislation, as I will go on to describe, relates to departmental spending. It as an advance against departmental spending that will be properly ratified, accommodated and acknowledged within the estimates process, as one might expect.

Departments—this goes straight to point just made by the right hon. Member for Kingston and Surbiton (Sir Edward Davey)—need money from 1 April, and they need more than the House has already allocated to them via the vote on account. The Government cannot afford to wait until July to deliver the resources needed for the next financial year, and the Bill seeks to close that gap.

The House has long recognised that the Government sometimes need to act without recourse to the normal processes, which is why Parliament has historically provided for the existence and use of a contingencies fund. But Parliament has wisely limited the amount that can be issued from the fund to 2% of the previous year’s cash spend. For 2020-21, that amounts to some £10.6 billion, which would be more than adequate in a normal year. But, as we have discovered, we do not live in normal times. These times are without precedent in the modern era. Through this Bill, the Government therefore ask the House temporarily to raise the limit on the amount that sits in the contingencies fund to 50% of that expended last year; I should be clear that that is approximately £266 billion.

Let me go further and say—again, this is a response to the point made by the right hon. Member for Kingston and Surbiton—that this is not new spending and it is not a blank cheque. All advances will have to be repaid once the main supply estimates are voted on in the summer, when the House will have the opportunity to scrutinise and debate where the resources have been allocated in the normal way. Nor does this represent additional Government borrowing. The Chancellor has said that he will update the Debt Management Office’s financing remit in April to reflect his recent announcements.

Quite simply, this Bill is about cash flow and the need to deliver the support we have announced without delay. It allows the Treasury to provide cash advances where they are urgently needed, and it provides for a safety net between supply estimates. This is an exceptionally short Bill, but it is an exceptionally important one in that it allows the Government to deliver the extraordinary package of support announced by my right hon. Friend the Chancellor. It solves a cash timing issue arising from the current process, and balances the need for an urgent response to the unfolding crisis with the necessary parliamentary scrutiny and oversight.

This Bill is yet another demonstration of the Government’s commitment to fighting the threat from covid-19—protecting businesses, jobs and, most importantly, our fellow citizens, from the ravages of this deadly disease. I wholeheartedly commend it to the House.

--- Later in debate ---

[Jesse Norman]

With the leave of the House, I will speak again. I am grateful to all Members who contributed to what, as the hon. Member for Oxford East (Anneliese Dodds) said, was a very wide-ranging debate. In fact, it was so wide-ranging that it barely focused on the measure before the House. However, I commend those who discussed the Bill. It is a very important piece of legislation, and—let me say this very straightforwardly—I am very grateful for the expressions of cross-party support from the Opposition parties. That has been crucial to the way the Government have thought about and framed our response to this crisis.

The Bill is another key element in shoring up the very wide package of measures to fight the covid-19 outbreak and, as the House has recognised, it represents a proportionate legislative response to recent events. Of course, it is proportionate in part because it will last only for one year; it is not designed to run longer than that.

I will start with the comments by the right hon. Member for Kingston and Surbiton (Sir Edward Davey), because he addressed the topic of the Bill; I am grateful to him for that. He made a series of important points. On whether the banks are really stepping up, as the hon. Member for City of Chester (Christian Matheson) said, we will know by the end of the process who have been villains and who have been heroes. I do not think the public will be shy in reaching conclusions of their own, and I am sure there will be plenty of quantitative bases for that when the moment comes.

The right hon. Member for Kingston and Surbiton asked why the number we will vote through today has been raised to 50% from 2%. That is a very important question. The reason is an anticipated escalation in the need for cash under—this point was made widely by colleagues across the House—conditions of radical uncertainty. It is also fair to say that it is not clear beyond any peradventure when the House will reconvene, and we have to accommodate the possibility of a delayed restart. As one might imagine, no assumption is made, but that possibility has to be contemplated.

The right hon. Gentleman also asked whether this constitutes an increase in spending. This is not a spending matter; it is a cash matter, and he needs to be aware of that. To reassure him on the question of local authorities, this does include spending that the Ministry of Housing, Communities and Local Government will make as part of the usual estimates process.

The right hon. Gentleman described his work examining processes for reviewing and considering Budgets, but this is not a Budget, so it does not fall under that. However, it is worth saying that we have an evolved system. It is a system that involves a lot of scrutiny— repeated days of looking at main estimates and supplementary estimates—but of course it is also a system that gives considerable authority to the majority party at any given time, and that is what constrains the ultimate outcome.

[Sir Edward Davey]

I hope the Minister is right on the banks, but my main point is about the estimates. Actually, we have only three days to debate the estimates. I have attended estimates debates in this House over the last 20 years; when we have estimates days, we never debate the estimates. That is my point.

[Jesse Norman]

That is a different point. My point is that Parliament has plenty of opportunity to scrutinise spending. If it does not do that, that is a choice that it makes.

The right hon. Gentleman’s final point was about whether this Government believe, or any Conservative Government have ever believed, that markets can do it all. Let me assure him that no Conservative Government have ever believed that, and this one certainly do not believe that. At the risk of invoking one of my great heroes, Adam Smith, the position is that commercial society is a dynamic evolution in which forms of property are supported and recognised in law and then used to become the basis of profitable market development. That is how our system has evolved over many decades, and the state is integral to that process for all the reasons the right hon. Gentleman has described, so this is a way of agreeing with him.

May I turn to the comments made by the right hon. Member for Hayes and Harlington (John McDonnell)? Again, I thank him for his support for the Bill, and I think that constructive attitude is important. He is right to call this the gravest crisis we have known, certainly for this generation. A strong theme in his speech and those of others was the need for more communications; it was also mentioned by the hon. Member for Sefton Central (Bill Esterson). Of course, we understand that on the Government Benches. During the debate, the House will be pleased to know, I got a text from gov.uk referring me to the coronavirus website. That is a direct intervention of a kind I am not sure I would approve of outside the context of a national crisis, but one that is very welcome in that context. It shows evidence of and bears testimony to the belief we have in this very important response and in the need for communications.

[Bill Esterson]

I am very grateful to the Financial Secretary for highlighting the issue that my right hon. Friend the Member for Hayes and Harlington (John McDonnell) and I raised about communication. The point about the gov.uk website is that not everybody knows about it, and a further point is that not everybody has access to the internet, particularly some of those most at need—older and more disadvantaged people—and that is where some of the other routes for getting information out there are so important.

[Jesse Norman]

I thank the hon. Member for that point, and he is absolutely right. One role that every Member of this House can have is to spread the word among constituents to make sure that this is widely understood.

The right hon. Member for Hayes and Harlington talked about the importance of consulting the trade unions. He will know that there have been consultations with Frances O’Grady and other trade union leaders, as well as with the Mayor of London, to try to build public understanding and a shared view of these issues.

A final point I would make about what the right hon. Gentleman described is that we have had statements on the Government’s response, two urgent questions, an Opposition day—we have one tomorrow—and two pieces of legislation in the last two days alone, so there has been every opportunity for parties across the House to question and interrogate us. As colleagues have been kind enough to point out, the Government have been working at tremendous pace, with every hour of the day being exploited for the purposes of trying to get the right outcome, and where we have imperfection, as it were, we will try to make this as good as we can over the next days and weeks.

Let me, if I may, move on to my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami). He asked what extra the Treasury will be borrowing as a result of this, and the answer is that this is a cash item, as he will recall. The debt management remit will follow, and we will set out the Government’s borrowing plans. He raised an interesting question about whether money spent in response to this crisis could be itemised differently in the national accounts. That is an interesting idea, and I thank him for it. He highlighted the impact of tech start-ups, and he is absolutely right.

I thank the hon. Member for Gordon (Richard Thomson) for supporting the Bill. I think he is absolutely right to talk about the need for business recovery. We do not share his excitement about a universal basic income, in part because it does not actually hug the need across the population as well as a well-functioning benefit system, and that is what we have tried to do. It is a live argument on both sides. Of course, there are parts of the spectrum, notably those on the state pension, where we have something close to a universal income already in place, although not necessarily at the level that people would have expected.

My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) persuasively and interestingly illustrated the choices faced by Government and businesses through his own business, and I thank him for that. My understanding of the personal guarantee issue touched on by many is that the circumstances for the business loans are to be agreed between the lender and the individual. There might be some element of personal guarantee, but not as relates to the primary residence. The desire is to build the flexibility and potential availability that comes with that, but without compromising people’s ultimate wellbeing.

I thank my hon. Friend the Member for St Ives (Derek Thomas) for his comments. Through his speech today and in his remarks in Treasury questions, he has registered his intense concern on this issue, and I thank him very much for that.

Let me wind up by saying that this is a proportionate legislative response to the crisis and that it seeks to close an important gap in cash flow in the estimates process. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).

Further proceedings on the Bill stood postponed (Order, this day).

Contingencies Fund Bill (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Contingencies Fund Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums to be issued out of, or paid into, the Consolidated Fund which is attributable to increasing, in relation to any time before 1 April 2021, the percentage specified in section 1(1) of the Contingencies Fund Act 1974 to a percentage not exceeding 50%.—(Eddie Hughes.)

Question agreed to.