Contingencies Fund (No. 2) Bill

(Limited Text - Ministerial Extracts only)

2nd reading
Thursday 11th March 2021 Commons Chamber

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

I beg to move,

That the Bill be now read a Second time.

This is a technical measure that concerns cash management. Its purpose is to allow the Government to use cash advances to act swiftly and decisively to safeguard the people of this country, both from the impact of the covid-19 pandemic and from other unexpected events. But I would emphasise that money from the Contingencies Fund constitutes a cash advance, which will have to be repaid once a Supply estimate is voted through the House; it is not additional spending. It is important to be clear that the House will still be able to scrutinise and debate where resources have been allocated in the usual way when the Government publish the Supply estimates.

As hon. Members will be very much aware, Parliament provides the Government with the authority to expend resources in the form of capital and cash. However, the Government must also sometimes provide a swift financial response to national emergencies and other pressing events. That is why the Contingencies Fund exists. In the Contingencies Fund Act 1974, Parliament put a limit on the amount that could be issued from the fund at 2% of the previous year’s cash spend. That cap has normally proved to be sufficient to meet unexpected and sudden financial requirements, but we are not living in normal times at present, and uncertainty as to the impact of covid-19 has required a degree of flexibility in setting the cap.

As colleagues across the House will recall, a year ago, as the full implications of the pandemic started to emerge, the House agreed to change the limit on the Contingencies Fund from 2% to 50% of the previous year’s cash spend for the financial year 2020-21. That had the effect of raising the amount in the fund from a possible £11 billion to £266 billion. This cash advance has been invaluable to Departments in dealing with the unprecedented events that have been set in motion by the pandemic. In fact, over the past 12 months, requests from the Contingencies Fund have totalled over £210 billion. It has provided the cash for Government interventions to support businesses, to support frontline workers and to pay for the furlough and other schemes. In addition, it has provided the financial firepower to help the NHS through the crisis, and it has funded numerous other measures that have helped to safeguard lives and livelihoods throughout this extraordinarily difficult period. As is the case in every previous year, the fund has also paid out on business-as-usual requests.

This Bill again seeks to adjust the limit on the amount that can sit in the Contingencies Fund for the financial year ending 30 March 2022 to 12% of last year’s cash spend. I will set out the reasoning behind that decision. With the new cap, the amount in the fund will total £105 billion. By contrast, with the 2% cap—the normal percentage limit—the fund would have contained £17.5 billion. That is clearly a substantial sum, and it would be more than ample to deal with spending requirements in the normal run of things.

While the Government will provide Departments with suitable resources for the 2021-22 year, it is prudent to be prepared in cash terms. While the resounding success of the vaccination programme offers us light at the end of the tunnel, it is equally true that we must remain vigilant. The crisis is not over, and therefore the Government believe it is only right to retain flexibility on the amount in the Contingencies Fund. However, given the experience accrued by each Department over the last year in dealing with the virus, we can scale back the limit from 50% of the previous year’s cash spend to 12%. Once again, let me assure Members that the House will still be able to scrutinise and debate where resources have been allocated in the usual way when we publish the supply estimates.

This is a small and technical but important Bill that will allow the Government to deal with unexpected events over the coming year. It provides Departments with a mechanism to respond swiftly and decisively to emergencies and sudden, unpredictable needs so that they can safeguard our public services and support the wellbeing of people across the country. It does not impinge on Parliament’s right to scrutinise and question, but it does underline this Government’s commitment to do whatever it takes to protect lives and livelihoods in order to overcome this virus, and I commend it to the House.

--- Later in debate ---

[Jesse Norman]

I will not detain the House for long. By leave of the House, let me just say a couple of words. I thank all Members who have spoken so far. I thank the hon. Member for Ealing North (James Murray) for the Opposition’s support for this, but I think he was mistaken in relation to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who was making a point about the absence of any person on the Labour Front Bench during the debate. That has largely been a characteristic of this debate so far, and that is a pity. I thank the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for his recognition of the way in which I and colleagues at the Treasury have leant into the difficult issues he raised in relation to the excluded. That does not bear directly on this debate, but the wider point he makes is welcome.

I am mindful that this debate has featured several contributions from Labour Members that have resolutely failed to engage with the substance of the Bill under discussion, and that is a particular shame. This is a party that talks about proper accountability but simply finds it impossible to exercise that accountability in the Chamber by asking the Minister questions. I hope that hon. Members will do that in the next stage of the debate, so that we can have a proper discussion about this. They have, after all, just had a long period of debate on the Budget in which any of the points they wished to raise—irrelevant to the Contingencies Fund Bill but relevant to that topic—could have been discussed. Instead, they have indulged in cheap and irrelevant political posturing, and that is a particular shame—all the more so as their contributions have had the effect of delaying an important and much needed debate in this House called by the Backbench Business Committee on International Women’s Day.

Question put and agreed to.

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

Contingencies Fund (No. 2) 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 (No. 2) 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 times before 1 April 2022, the percentage specified in section 1(1) of the Contingencies Fund Act 1974 to a percentage not exceeding 12%.—(David T. C. Davies.)

Question agreed to.