HC Deb 21 November 1950 vol 481 cc242-8
Mr. Nigel Birch (Flint, West)

I beg to move, in page 2, line 9, to leave out subsection (3).

The Economic Secretary is in such a melting mood that I hope we may get some concession here. The hon. Gentleman has made one or two remarks which would not have disgraced Gladstone when he was at the Treasury about the control of expenditure, and which we thought rather out of date.

The effect of the subsection we seek to remove is given much more clearly in the Explanatory Memorandum than can be deduced from the Clause. The Explanatory Memorandum says: Subsection (3) provides that temporary advances may be made from the Civil Contingencies Fund to the Intra-European Payments Account if these are required to enable payments out of that Account to be made in advance of receipts in respect of conditional aid. It may be that money will be required at short notice, and before we can get it from America under the conditional aid provision.

We object to the use for this purpose of the Civil Contingencies Fund which, as the Committee will recollect, is intended to deal with small matters only. In 1939, before the war, it was only £5 million, and was intended to deal with a sudden emergency like a hurricane in an island in the West Indies, the purchase of the Codex Siniaticus, or a celebration of some sort which had not been foreseen. Its purpose was to deal with small matters which would weary the House and which would hold up its business if Ministers had continually to come down to the House to get them through. That is how it was used from its inception until the last war, with the exception of the two war periods.

Since the war this Fund has been increased immensely and now stands at £125 million. One of the main arguments put by the Government when seeking to keep this Fund at such a high level was that it might be required to find large sums out of it for this very purpose, for the use of the European Payments Union in a task which is really one more suitably done by the Exchequer Equalisation Account. We are not maintaining that under this Bill money from the Civil Contingencies Fund will be misused, but we are arguing that it is wrong to charge this money to that Fund because, if we do, the chance of reducing the Fund to a more correct level will be lost.

This is really much the same point as my right hon. Friend was arguing on the first Amendment. It is a question of curbing the power of the Executive. If the Executive has £125 million pocket money which it can use for a year without coming back to this House, evil things may result. And evil things have in tact resulted, because no less a man than the Minister of Health, who is sitting on the Front Bench opposite, borrowed £55 million from this Fund which enabled him to conceal his maladministration until after the Election. [Laughter.] The right hon. Gentleman, of course, considers his maladministration a rare joke. It is—to him. But it is not quite such a joke to other people.

We believe that the use of the Fund is wrong. If the Economic Secretary is sincere, as I am sure he is, and is anxious to return to Gladstonian principles, then he should accept this Amendment. That will enable us subsequently to amend the Civil Contingencies Account and reduce that sum of money from the somewhat distended figure of £125 million to something like £50 million or less, where we believe it ought to be.

The Financial Secretary to the Treasury (Mr. Jay)

I regret to say that on this point we are not able to be quite so accommodating. I am afraid that if we were to accept the Amendment a very essential cog in the machinery of the European Payments Union would be removed. I do not really know why the hon. Member for Flint, West (Mr. Birch) should object so much to the use of the Civil Contingencies Fund for this purpose. I should have thought that this was precisely the kind of object for which such a fund should be used. After all, this is not a question of outright expenditure or even indeed of expenditure on the Vote of any Department at all, so that it is unnecessary to drag in my right hon. Friend the Minister of Health, who, I see, has left. This is simply a question of making temporary advances over an emergency or a contingency, if hon. Members prefer that term, until funds accrue again, when those advances can be repaid.

The arrangement is, as the Committee knows, that the Civil Contingencies Fund make these advances to the Intra-European Payments Account, and in due course the Intra-European Payments Account receives conditional aid from the Economic Co-operation Administration of the American authorities, and is thereby able to reimburse the Civil Contingencies Fund. That seems a convenient arrangement and the most reasonable. Indeed, I think that what has occurred entirely justified the argument which I put forward last summer when we were debating the Miscellaneous Financial Provisions Bill, to the effect that we must have a maximum for the Civil Contingencies Fund of something of the order of £125 million if we were to play effectively our part in the European Payments Union, which was just being brought into existence. We have, in fact, made arrangements for the initial aid. Arrangements for the initial debit have gone forward, and we see no reason to abandon those arrangements or to accept the Amendment proposed by the hon. Gentleman.

Lieut.-Commander Gurney Braithwaite (Bristol, North-West)

When the Financial Secretary rose to reply, we on this side of the Committee had some qualms in noticing the change of bowling, because he is notorious for his constructive gestures and obstructive actions. I think that the speech of the hon. Gentleman showed how far the Socialist Government have slipped in the very matter which his colleague enunciated so clearly a short while ago about the proper use and control over Government expenditure. We are now told by the Financial Secretary that the Civil Contingencies Fund has become a cog in the machinery of European payments. With respect to the hon. Member, who was not here at the time, that was never the objective of the Civil Contingencies Fund when it was established. It was intended to be used for internal domestic purposes within our own country and, as my hon. Friend the Member for Flint, West (Mr. Birch), pointed out, domestic purposes of a very minor nature.

5.45 p.m.

It seems to me we are up against this problem: What is in fact a civil contingency? It now appears to be something which happens on the continent of Europe and outside our own shores altogether. When the Financial Secretary said a moment ago that he had already explained to the House why this Fund should carry a sum of something like £125 million, I thought he exemplified in that one sentence the difference between us and this matter. We do not agree. We believe that this whole matter has to be tightened up and this would seem a good opportunity to do it, hence the Amendment. If that opportunity is to be taken one of two things can be done. Either the Treasury must alter the name of the Fund altogether and drop all pretence that it exists for civil purposes; or say quite frankly that they are not pro- posing to use this Fund—which is what we should like them to say—but propose to finance this from some other source altogether.

We on this side of the Committee feel that it is an excuse for keeping the Civil Contingencies Fund at an unnecessarily high level. I think I noticed the Economic Secretary asking under his breath how the matter could be done if it were not done through the Civil Contingencies Fund. That is the argument of every parent who goes to his child's money box—"From what other source am I to get money for my beer if I don't take the pennies out of Tommy's money box?" It is the responsibility of the hon. Gentleman to tell us how, but in fact he has had a suggestion from my hon. Friend who asked about the Exchange Equalisation Fund.

We remember the history of that Fund. Some of us were in the House when the Exchange Equalisation Fund was established in 1931 for the purpose of ironing out day-to-day fluctuations in the £ exchange. That Fund also grew in size to a figure which some of us regarded as unwieldy. We on this side of the Committee are not satisfied with the reasons given by the Financial Secretary. Perhaps his colleague will produce better ones. But it seems to me that the case put by my hon. Friend is one that should at least be considered by the Government; that the Civil Contingencies Fund is being used for purposes for which it was never intended, that it is too high and that the time has come for a re-examination of the whole matter.

Mr. Selwyn Lloyd (Wirral)

Perhaps the Financial Secretary would enlighten the Committee on one point. I appreciate it is necessary for some fund to advance this money, but it does not seem to me to be appropriate to use the Civil Contingencies Fund. I do not think that is the purpose for which the Fund was set up. Speaking from almost complete ignorance, I should like some elucidation of the reason why the Exchange Equalisation Fund cannot be used for this purpose.

Mr. Jay

The short reason is that this money has to be advanced to the Intra-European Payments Account in order that the proper accounting arrangements under Marshall Aid generally for conditional aid may be carried out. It is not possible under the constitution of the Exchange Equalisation Account that that account should advance money to the Intra-European Payments Account. That is the reason why.

Though the Exchange Equalisation Account can make advances necessary for the ordinary gold-free credits, as they are called, to E.P.U., it is necessary to bring the Civil Contingencies Fund into action for the purpose of what is called the initial debit which is what we are concerned with under this Clause. It arises from the method of accounting for conditional aid, and, as I said, from the fact that the Exchange Equalisation Account cannot make advances to the Intra-European Payments Account. It is a real difficulty, and so far as we have been able to discover, this is the only possible and convenient method of dealing with it.

Colonel Crosthwaite - Eyre (New Forest)

That seems a most extraordinary answer from the Financial Secretary. If he will look at subsection (3) he will see the words which govern its application are, "urgent services." Nobody could possibly pretend that the subscription of an initial debit is an urgent service. It cannot be. Until the hon. Member spoke I understood that the whole of this Clause was designed to make the cover of American conditional aid come at a later date for the payments we might have to make; and in mentioning initial debits and that sort of thing he is going outside the terms of the Clause.

As I read subsection (3) it is possible for advances to he made from the Civil Contingencies Fund without any assurance that they will be covered in the future by American conditional aid, and I ask for an assurance that any amount we may pay will in certitude he covered by American conditional aid.

Mr. Selwyn Lloyd

I am obliged to the Financial Secretary for his answer to my question. But it would seem to be much more reasonable that the Exchange Equalisation Account should be used for this purpose than that the Civil Contingencies Fund should be so used.

Mr. Jay

That was considered, but it was thought that it was a much more complicated arrangement. In reply to the hon. and gallant Member for the New Forest (Colonel Crosthwaite-Eyre), I do not think he has quite appreciated the point. I would first give him the assurance, for which he asked, that any funds advanced from the Civil Contingencies Fund under this Clause will be repaid from Marshall Aid sources under conditional aid. He said, however, that he understood the Clause related simply to conditional aid, and in that he is perfectly correct. He went on to say that he was surprised, or shocked, to hear we were using it for the purpose of making available the initial debit through the Intra-European Payments Account. But an initial debit is of course the obverse of conditional aid, and because this Clause relates to conditional aid it is under this Clause and by this arrangement that we make arrangements for the initial debit. If he thinks the matter over he will see that it really is the most practical way of doing it.

Amendment negatived.

Clause ordered to stand part of the Bill.