Contingencies Fund (No. 2) Bill

James Murray Excerpts

2nd reading
Thursday 11th March 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op) [V]]

I thank the Financial Secretary for setting out the case for the Bill so clearly. The Bill seeks to amend the Contingencies Fund Act 1974, which is one of the monuments of a previous Labour Government. The 1974 Act embodies principles that are central to the accountability of Government, so its amendment should not be taken lightly.

This time last year, the Opposition fully accepted that the conditions of the pandemic made it necessary, expedient and right for there to be provision for the Government to act swiftly. We accepted that, in the rush of the early response to the outbreak, there could be times when it would not be possible to follow normal procurement processes. We accepted that, at certain points, the spot price paid for particular goods facing global shortages might be higher than it would otherwise have been, and we accepted that, on occasion, at a time when the Government were taking on entirely new responsibilities, some mistakes would be made. But we do not accept, and the British people will not accept, that what may have been excused in the early days of the outbreak has turned into a succession of failures and scandals, which it seems Ministers can no longer even see as wrong.

Last year, the Opposition agreed to a rise in the provision of the Contingencies Fund to some 50% of annual expenditure. While we accept that a higher than usual level for the Contingencies Fund is again in order and we will not be opposing the Bill, Ministers would do well to remember that the fund was created as a fall-back and that its extension is an emergency response, not an opportunity for unaccountability. Ministers seem to have forgotten that public money needs to be spent effectively, in a way that achieves value for money and commands public confidence.

The starkest example of failure by this Government must surely be their flagship Test and Trace scheme, a programme outsourced at great expense and the subject of a report published yesterday by the Public Accounts Committee, which was truly damning. The Government should be embarrassed and deeply apologetic over Test and Trace, which Lord Macpherson, who led the Treasury civil service from 2005 to 2016, described as

“the most wasteful and inept public spending programme of all time.”

What makes it even worse is that everyone in the country desperately wanted Test and Trace to work. Everyone was willing the programme and its team to succeed. We all wanted and needed that money to be spent on a programme that would achieve its stated goal, and we have all witnessed the profound consequences of incompetence on such a scale. I lost count of the number of times that my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), my right hon. Friend the Member for Leicester South (Jonathan Ashworth) and my hon. Friends the Members for Oxford East (Anneliese Dodds) and for Houghton and Sunderland South (Bridget Phillipson) called for the Government simply to focus on getting Test and Trace working, yet Ministers did not.

The opening summary of the Public Accounts Committee’s report contains the following telling sentences:

“The Department of Health & Social Care justified the scale of investment, in part, on the basis that an effective test and trace system would help avoid a second national lockdown; but since its creation we have had two more lockdowns. There is still no…evidence to judge”

Test and Trace’s “overall effectiveness”.

Only people who have no real understanding of the value of money or the importance of public investment in changing lives for the better could be so reckless about how it is spent. We believe that the Government really need to learn from the last year, not only by accepting that the outbreak exposed the weakness of our rights at work and the impact of a decade of cuts to our public services, or by recognising that they repeatedly did too little, too late to protect the public’s health and our economy, but by making serious structural reforms to how they initiate and examine spending.

The shadow Chancellor, my hon. Friend the Member for Oxford East, has set out how the next Labour Government would do things differently, by taking a robust and determined approach to ensuring that public money improves the lives of those we serve. She has explained how we would invite the Comptroller and Auditor General to submit an annual report to Parliament, bringing together the National Audit Office’s findings throughout the year into a single assessment of the effectiveness of public spending in those areas that it has examined. As my hon. Friend has said, we must hard-wire value for money into the budgetary process.

But the value for money aspect is not the only part of this extraordinary year for public spending that commands our attention. It would be possible to achieve value for money and yet still fall far short of other standards we expect. That is why the new clause that the Opposition will move in Committee seeks to improve the transparency of Government spending.

We know only too well, as my hon. Friend the Member for Leeds West (Rachel Reeves) has set out, that the way in which procurement is conducted also matters very much. Put simply, the time to end emergency procurement is overdue. Covid, as she rightly observed, is no longer a surprise. Supply chains have been established and, while there are of course still significant challenges and responding quickly remains essential, there is no longer a case for the continued widespread use of emergency measures of procurement for items that the Government now know how and where to find.

Contract publication should now follow the normal rules, and when contracts fail to deliver, the Government should get money back. That is public money. “Deliver or you won’t get paid” is what contractors expect from every other organisation and company they supply. The Government must not be the softest touch in the market.

We must drive a culture of transparency throughout public spending. The new clause that we will move today seeks to improve the transparency of the Contingencies Fund, because that is what the Bill before us concerns, but it is time for every part of public spending to achieve better value for money and for the Government to use their spending power to improve standards in the way the public would expect. The Opposition believe that achieving these changes need not be difficult or controversial.

We recognise the power of public investment to transform people’s lives for the better. That is fundamentally why we, like the British public, cannot bear to see Ministers casually and carelessly waste public money on deals that do not deliver, on contracts that do not work and on outsourcing that should never have taken place. Every pound that this Government misspend makes it that bit harder for nurses to accept the Chancellor’s pleading that a 1% pay rise is all he can afford. Every penny that this Government waste could have gone towards building a fairer, more secure future for our country. We will not be opposing the Second Reading of this Bill, but our new clause in Committee will set out a new standard of transparency that would pull Ministers up, force them to sharpen their focus on value for money and make sure we have more money to spend on the things that matter to us all.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before I call Andrew Jones, I want to point out that although what we are dealing with is very important, we also have the Committee of the whole House and Third Reading, and then we have 70 contributions in the International Women’s Day debate. If people could keep that in mind as they consider the length of their contributions, I would be extremely grateful.

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[James Murray [V]]

With the leave of the House, I would like to respond briefly to the debate and pick up on some of the contributions. First, I would like to address a comment by the hon. Member for Thirsk and Malton (Kevin Hollinrake), who seemed to claim that I was not in my place during his speech. I would like to reassure him that I have been listening carefully throughout in the virtual Chamber, but perhaps he was not here earlier when I began my contribution virtually.

My hon. Friend the Member for Brent Central (Dawn Butler) made a powerful and important case about the link between trust and transparency and how important it is for us to take action in this place to reassert that link. She also set out how insulting the 1% pay rise—a real-terms pay cut—is to the nurses in our country. My hon. Friend the Member for Sefton Central (Bill Esterson) mentioned the huge waste that has happened through Test and Trace and the private outsourcing giants that have benefited from that money. It is telling that no Conservative Members today addressed Test and Trace and the spending on that programme, as far as I could tell. I found it curious, however, that the hon. Member for South Cambridgeshire (Anthony Browne), when trying to make a case around value for money, chose to focus on the time that the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) spent in City Hall, given that one of the most notable achievements of that right hon. Member in that office was to oversee £46 million of public money being spent on a garden bridge that was never built.

As I made clear in my opening remarks, we will not be opposing the Bill’s Second Reading, but in the Committee debate that follows, I will set out how our new clause aims to introduce a new standard of transparency, which we believe is urgently needed after the Government’s approach over the last year.

Contingencies Fund (No. 2) Bill

James Murray Excerpts

Committee stage & Committee of the whole House
Thursday 11th March 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op) [V]]

The new clause is intended to ensure that the Government learn from the past year and, as I set out in my earlier contribution, not only recognise that they have repeatedly done too little, too late to protect the public’s health and the economy through the outbreak, but make serious and structural reforms to how they initiate and examine the spending of public money. The new clause would ensure that the extra financial freedoms that Parliament grants in the Bill are used in a manner that reflects the importance of transparency with public money.

I shall not repeat the arguments that I and other hon. Members made on Second Reading, but address the substance of the new clause. Our new clause is simple. Subsection (1) sets out that, in respect of each plausible category of unforeseen Government spending—urgent cash requirements for existing services; urgent cash requirements for new services, whether yet approved in principle or not; increased cash requirements; and short-term cash flow issues—the Treasury must lay before the House a report of all the advances made that month.

Subsection (2) sets out that each payment from the fund should be explicitly associated with ministerial statements, which explain the purpose of such expenditure. Subsections (3) sets out that where such payments have been carried out only on the basis of ministerial direction, the fact and nature of that direction should also be disclosed. We fully accept that on occasion ministerial directions are a vital part of how our country and political system responds quickly and effectively to unforeseen circumstances. There are occasions when the accounting officer will not be able to align urgent needs with normal accounting procedures. What matters is not the fact of the direction, but its nature.

Subsection (4) ensures that where rapid procurement decisions are taken, they provide an opportunity for the Government to improve and are assessed as such. The role of the Comptroller and Auditor General is crucial in our system of parliamentary control over public finances. There are lessons to be learned from the specific practice of emergency procurement. It is wrong to see each instance of rapid procurement as a special case.

Subsection (5) reflects the premise of subsection (4) and ensures that there is no conflict with the wider role of the National Audit Office. I very much hope that the Government will feel able to accept the new clause in the spirit in which we propose it.

The Financial Secretary will be aware of the many extraordinary and frankly irregular arrangements, which have been explored in the court and in the media recently, for the disbursement of public money in the past year. I will not take the Committee through the full annotated catalogue as time is so limited, but I will mention just two of the most egregious examples to emphasise our concerns.

First, there was the contract given to Randox Laboratories for £133 million in respect of tests. Randox is a company that we understand is advised by a Conservative Member. The Department of Health and Social Care ordered that 750,000 of those tests be withdrawn from use for safety reasons. Secondly, at least £150 million of a £252 million face mask contract with Ayanda Capital seems to have been wasted owing to the unsuitability of one type of mask in the order. We understand that the contract included FFP2 masks, which did not meet requirements for use by frontline healthcare workers because they had ear loops instead of head loops. The sum of £150 million pays the salaries of some 4,000 nurses. That fact alone should make clear why it is so important for public money to be spent on improving the lives of those we serve.

The new clause sets out a new standard of transparency that would pull Ministers up, force them to sharpen their focus on value for money, and ensure that we have more money to spend on the things that matter to us all. With such concerns in mind, I ask the Committee to support the new clause.

[The Second Deputy Chairman of Ways and Means]

Before I call Andrew Jones, let me just say that I am grateful for the restraint that people demonstrated on Second Reading. We have a rather extensive call list for the International Women’s Day debate that follows, so if people could show the same restraint in Committee, whether they are remote or in the Chamber, I would be grateful. A number of people withdrew from the Second Reading debate; if anyone wishes to withdraw from Committee stage, please will they do so in the normal manner, through the Speaker’s Office?

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

As you will be aware, Mr Evans, clause 1 provides for an increase in capital for the Contingencies Fund. It raises the limit from the standard 2% to 12%, providing a sum of approximately £105 billion for the financial year 2021-22 only.

We are all agreed across the House on the central importance of accountability to Parliament, but it is the Government’s very firm view that new clause 1 is not needed in order to achieve accountability. It is important to say again that supply processes continue to be used in the usual way with expenditure still subject to parliamentary scrutiny and a vote. This Bill simply permits an advance on expenditure that will be included in the main or supply estimates.

Let me set out four points that make this quite clear. First, the Contingencies Fund is about ensuring cash flow, restricting it to urgent services in anticipation of parliamentary provision becoming available and temporary funds required for necessary working balances. It is not additional spending; it is simply a cash advance to be repaid. It does not in any way preclude the scrutiny by Parliament of additional provision sought by a Department through the supply estimates, nor does it preclude the Comptroller and Auditor General from expressing his view on the regularity of departmental expenditure.

Secondly, each and every departmental accounting officer remains fully accountable for expenditure; and, of course, that expenditure will be audited by the NAO in the usual way as part of the annual reports and accounts of each Department. Transparency arrangements for ministerial directions—where they are sought under the requirements of the doctrine of “Managing Public Money”—will also continue in the usual way. Accounting officers are already required to publish any direction that they receive as soon as possible, unless there is a broader public interest in keeping it confidential.

Thirdly, the House has seen throughout 2021 that Departments must notify Parliament by way of a ministerial statement agreed with the Treasury where a commitment will be or has been entered into in advance of supply. I would like to make it clear that the mandatory WMS wording agreed with Parliament and the NAO already distinguishes whether this advance is a new service, new expenditure or simply a cash requirement ahead of a supply estimate.

I remind hon. Members that the Contingencies Fund is not a tool—some hon. Members have made this point—that Ministers can choose to use; it is not discretionary. It is managed entirely by the Treasury, and the accounting officer must ensure that advances are given in line with strict rules agreed between Parliament, the NAO and the Treasury. These rules are set out clearly in the published estimates manual. Every Department makes an application outlining the urgency of their case and how they plan to meet the listed requirement. It is worth mentioning that the NAO also audits the Contingencies Fund accounts, and that includes a full list of advances.

Let me turn to a couple of the points raised by Members in the debate. I did ask for questions on the Bill, but the hon. Member for Luton North (Sarah Owen) somehow found that difficult. She raised another irrelevant issue about public spending. She asked me about my own link. I assure her that I had nothing to do with the awarding of any contracts. As my hon. Friend the Member for South Cambridgeshire (Anthony Browne) pointed out, this is true for Ministers across the Government, according to the NAO.

The hon. Member for Hackney South and Shoreditch (Meg Hillier), who chairs the Public Accounts Committee, made a speech, wonderfully—and I thank her for it—on the Bill. I am very grateful. She asked whether the Bill is rushed through. The answer to that question is no, it is not. It is important to do it, we think, before the beginning of the new financial year. The same Bill was put through in March last year, and so it is here. She asked about Treasury controls. We fully, strongly believe in them. She recommends Ghanaian principles of public finance, but I am not sure I can follow her in that direction.

[James Murray [V]]

With the leave of the Committee, I will respond briefly to the debate and pick up on some contributions that hon. Members have made. My hon. Friend the Member for Luton North (Sarah Owen) made powerful remarks and drew our attention to how hollow the phrase of the former Prime Minister—that “sunlight is the best disinfectant”—now rings, given how the current Government have behaved. My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) spoke from great experience about the weakness of Parliament in scrutinising Government spending. She set out how the claims of bureaucracy from Government Members are misplaced and that, in fact, new clause 1 is about transparency and accountability. My hon. Friend the Member for Warrington North (Charlotte Nichols) set out clearly the consequences of vast sums being given to companies with no track record of delivery, underscoring why this really matters to people’s lives.

My hon. Friend the Member for Newport West (Ruth Jones) made it clear that the Government should listen and learn from the events of the past year and regain the trust of the public, while my hon. Friend the Member for Bradford West (Naz Shah) highlighted the Government’s shameful record on transparency, value for money and, crucially, the outcome of what is actually delivered. Finally, my hon. Friend the Member for Luton South (Rachel Hopkins) made some critical points on scrutiny leading to better government. She spoke from great experience of why it is so vital that the reporting of written ministerial directions is taken into account so that they can take responsibility for their decisions.

I thank the Minister for his comments, but I was disappointed that he did not use the opportunity to refute or respond to any of the comments about the Public Accounts Committee’s report on Test and Trace. I noted that despite some Government Members having spoken for a second time today, they still did not find time to justify and explain how the spending on Test and Trace has been value for money. The Minister fundamentally failed to address the inadequacy of current scrutiny arrangements, given what has happened over the past year.

As I made clear in my opening remarks, our new clause aims to introduce a new standard of transparency. We believe that it is urgently needed after the Government’s approach over the last year. I am not convinced by the Minister’s argument. I welcome the SNP group’s support for new clause 1 and we will seek a Division on it.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Question put, That new clause 1 be read a Second time.