HC Deb 19 November 1952 vol 507 cc1947-57

Order for Second Reading read.

7.14 p.m.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)

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

The purpose of this Bill is to maintain at £126½ million the maximum permitted for issues from the Civil Contingencies Fund. If no action is taken by this House, under existing legislation the Fund will fall to a maximum of £1½ million after 31st December next. I can state the history of the matter quite briefly.

Before the war, the Fund stood at a level of £1½ million and remained at that figure until the end of the war. As the war was mainly financed—as hon. Members opposite will recall—by Votes of Credit and the normal Supply procedure did not generally operate, the Fund was very little needed. But, after the war, by the Miscellaneous Financial Provisions Act, 1946, as the right hon. Member for Colne Valley (Mr. Glenvil Hall) will no doubt recall, the late Government raised the level to £250 million. This the late Administration brought down in 1950 to a total of £126½ million—that is to say, as I understand it, the original basic £1½ million plus £125 million. This accounts for the rather odd figure, which we also put forward, of £126½ million.

The House will be familiar with the purposes for which the Fund is used. It is used only for temporary financing, whatever may be the purpose of the advance. The advances are normally repaid, almost entirely from Votes, for the main part during the same financial year, although a certain percentage of the Fund may relate to expenditure borne on the Consolidated Fund. In practice, these advances are for one of three main purposes. The first is to meet a sudden and unexpected emergency. A very good recent example was the disaster which befell Lynmouth during the summer. The House will recall that the Government were able to make an immediate grant for relief purposes and that it was financed from the Fund.

Generally, perhaps, the items in this category do not amount to very large sums. I hope they will continue not to be large amounts. The big items generally result from the operations of the great trading Departments, particularly the Ministry of Food and the Ministry of Materials. These Departments have a trade turnover of hundreds of millions of pounds. They do not, of course, spend their money evenly throughout the year and, what is perhaps more pertinent, their receipts do not come in evenly either. Stocks and prices, commercial considerations and so on, may affect temporarily the balance of their expenditure and receipts. Whatever the future may hold, the two Departments I have mentioned are continuing large-scale trading operations, and one or two other Departments conduct trading operations on a smaller scale. It is essential to be able to finance temporary deficits in which they may be involved in their trading operations.

The third general category for which it is necessary to use the Fund is the sort of case of which an example was given by the Chancellor during the debate on the Address when he indicated that there would be some overspending of the Ministry of Supply Vote. I do not think the House will want me to go into the details of that. The House will recall that, among other things, there was an acceleration of textile orders announced last summer in connection with the difficulties which the textile industry was undergoing, and that, of course, involved some additional expenditure.

Having, I hope, suggested to the House the need for a Civil Contingencies Fund of an appreciable size, I come now to the inevitable question as to whether the figure we present in this Bill is the right one. It is a figure which has stood for one year under the present Administration and also for one year under its predecessor. It is, therefore, quite impartial as between political parties. Obviously, in fixing the figure, we must find a reasonable balance between two conflicting considerations. On the one hand, the Fund clearly should not be so large as to encourage snap estimating or careless extravagance and, on the other hand, it should be large enough to ensure that the necessary operations of the Government are not crippled by purely temporary shortages of cash.

It may help the House in coming to a decision as to the correctness of the figure if I mention that in 1950–51 the peak demand on the Fund at one time was £108 million and in 1951–52 it was £92 million. On the face of things, it would not be wise to assume—bearing in mind the particular example to which I referred from my right hon. Friend's speech—that one could fix a lower figure. That is reinforced by the fact that, as will soon be disclosed in the accounts of the Civil Contingencies Fund for 1951–52, shortly to be laid before the House, the total payments out of the Fund in 1951–52 were £162 million. That is on Votes alone. There were, of course, also some repayments during the year from Supplementary Estimates.

On the other hand, it does not seem necessary, on these figures, to raise the limit, assuming, as I do and as I am sure all hon. Members will do, that we ought to keep it as low as we can. I would, therefore, recommend to the House that we keep the figure for this year at £126½ million, that is to say the present figure.

There is one other provision of the Bill to which I ought perhaps briefly to invite the attention of the House. We are continuing the present limit for one year only compared with the two years' extension provided in the Act of 1950 and the four years' extension in the 1946 Act. We also provide, as hon. Members may have observed, that if in the future it is desired to continue the figure at this same level of £126½ million, this can be done in the Expiring Laws Continuance Bill. That would only be possible if the figure for the future were to be the same; any increase or decrease would involve a separate Bill of the character of the present one. That seems to be a practical procedure which secures that this matter will be within the control of this House within a year.

7.21 p.m.

Mr. Glenvil Hall (Colne Valley)

I think that those Members of the House who were present on the last occasion when a Bill of this kind was debated will have noticed the astonishing change of attitude shown by the Financial Secretary to the Treasury compared with the attitude adopted by the Conservative Party in 1950.

This Bill has been on the Order Paper for at least a week. It was originally put down for last Wednesday, together with the Public Works Loan Bill and the Expiring Laws Continuance Bill. I am not sure, but I think there was also some other business down on the same day. We spent the whole of that day, and very properly so, in considering the Public Works Loan Bill. So far as I could see, there was no attempt on the part of any of my hon. Friends on this side of the House to hold up the proceedings; in fact, so far as speakers in the debate were concerned, it was turn and turn about.

I want, therefore, on behalf of my hon. Friends on this side of the House, to register straightaway, a most emphatic protest that the Government should think they could get this Bill, together with the Expiring Laws Continuance Bill and the Public Works Loan Bill, as well as other business, with the Rule unsuspended, in one Sitting. I suppose the excuse which the Government will put forward is that it is essential that these Bills should go through all their stages in the next few weeks. I have no doubt that that is quite true, but I wish to ask the Financial Secretary, who did not deal with this point at all, why they have waited until November to bring this Bill before the House.

We all know that, together with other Measures, it must be on the Statute Book before the end of the year. When my right hon. Friend the Member for Battersea, North (Mr. Jay) introduced the Civil Contingencies Fund Bill in 1950, the then Labour Government showed a proper regard for the House in introducing it in July. It will be within the recollection of Members on both sides that during the earlier part of this year the business which the Government brought before us had very little merit, and it would have been possible to have brought in this Bill before we rose for the summer instead of the Government bringing in a Bill to help the brewers.

I have therefore no excuse to offer for the fact that we intend to keep the House a little time tonight examining this Measure, which, after all, deals with a considerable sum. What is the Civil Contingencies Fund? I have heard it variously described in this House over the years. It is sometimes called a petty cash account, sometimes a kitty, sometimes an emergency fund. I think the last time we debated the matter it was referred to by one hon. Gentleman now on the Government side of the House as a loose reserve into which unscrupulous Governments could dip at any time. It has also been described occasionally in this House as a cloak for faulty estimating.

Actually, as its Title indicates, it is to be used to make temporary payments which could not reasonably have been foreseen when the Estimates were submitted. As I think the Financial Secretary told us, it has now been in existence for about 90 years. I wish to say on behalf of my hon. Friends that we believe that a fund of this kind is absolutely essential. There must be an account of this nature in any business, however small that business may be, and when we remember what a tight control the House exercises in financial matters, and how our financial procedure governing the issue of money from the Consolidated Fund is laid down, it is essential, in our view, that we should have a fund of this kind which can be used in an emergency.

We on this side of the House do not object, and never have objected, to the existence of this Fund. We support it wholeheartedly, we realise the need for it, and we want to see it continued in being. That does not mean that we cannot and do not mean to criticise the proposals of the Government in the Bill before us this evening. Having agreed, as we do, that a fund of this kind is essential, the next point to consider—I think the Financial Secretary mentioned this—is what upper limit should be set to the drawings by the Treasury on the Consolidated Fund for this purpose.

This Fund began, as I think most of us are now aware, in 1862, when a sum of £120,000 was advanced. Conditions then were very different from what they are now. Even by the beginning of the First World War, the amount had not changed very much—it had, I think, risen to only £300,000 in 1913. After that war it was increased temporarily, in 1919, to £120 million, and a couple of years later decreased to the £1½ million at which it stood until 1946, when in the Miscellaneous (Financial Provisions) Act of that year the Labour Government of that time increased it to £251½ million. In 1950, my right hon. Friend the Member for Battersea, North reduced it to £126½ million, the figure at which it now stands.

Is that limit the right one? My right hon. Friend then put in as the date during which the Act should continue two years ahead of the year in which he was moving the Bill. It will be quite obvious from this that the Government of that time felt that £251½ million was the right figure then but desired that the House should look again in due course to see if it was or was not the correct figure at which the Fund should continue to stand. We must remember that there is a great difference between the old days, when a very small sum was obviously adequate and when the items for which it was needed were normally not large, and now.

The ambit of the Fund in these modern times has been greatly extended, and it can now be used, and very properly so used, to finance the very large trading Departments of the Government. The Ministry of Food and the Ministry of Supply both need cash from time to time, sometimes quite considerable sums in cash balances, and I, for one, am not at all convinced that £126½ million is actually too large as a reserve for these undertakings.

The money advanced in this way is not squandered, but is very fruitfully and usefully employed. It helps the Government in their bulk buying, which, in turn, helps to keep down the cost of living, and to view this Fund, as some hon. Members on the other side of the House have done in the past, as a sort of loose reserve to cover up the defalcations of the Government, is, quite wrong.

We have to realise that £1½ million, which I gather is what the Government presently hope to reduce the figure to, may not be enough. It seems to me, from what the Financial Secretary said, that the Government may be intending to wind up some of the trading accounts which at present exist. It may well be that, in their view, the Ministry of Food, for example, should presently go out of existence. But, if it is to be kept going, and if the bulk buying of meat and other things is to be continued, then, quite obviously, to return to an amount of £1½ million as the upper limit of this Fund will not provide anything like enough.

In 1950, the House had a very lively debate on this Bill. I do not think the Financial Secretary himself took part on that occasion, which I think is a great pity, because he would have enlivened the proceedings, and it would have been very useful for us tonight to have quoted—I am quite sure against him, because he has obviously altered his views since then—some of the observations which he might then have made.

To look up HANSARD of the 10th July, 1950, is an amusing experience. Quite a number of his hon. Friends let themselves go on that occasion. They moved to reduce the £126½ million to a mere £50 million, and they put forward—from their point of view—some very cogent reasons why the sum of £50 million should be inserted in the Bill.

The right hon. Gentleman the Member for Blackburn, West (Mr. Assheton), himself a previous holder of the office which the hon. Gentleman opposite now holds, really did let himself go on that occasion, as well as the hon. Member for Flint, West (Mr. Birch). The right hon. Gentleman the Member for Blackburn, West said: We believe that procedure ought to stop, and the sooner it stops the better. By that, the right hon. Gentleman meant keeping the Civil Contingencies Fund at what they considered too high a level. He went on: I suggest that unless we put our foot down and set a limit to this Fund, a very reasonable limit which should soon be reduced—the £50 million could soon be reduced to a much lower figure—we shall weaken Parliamentary control over finance."—[OFFICIAL REPORT. 10th July, 1950; Vol. 477, c. 1079.] Nothing, of course, could be more absurd than a suggestion of that kind—that this Fund, used as it is for essential purposes connected with the trading Departments of the Government, would weaken Parliamentary control over finance. For that reason, I was very glad to hear the Financial Secretary say tonight that he thought that the £126½ million in the Bill is a very reasonable figure; if I understood him rightly, he also thinks that this sum should be retained.

From all we hear, the Chancellor of the Exchequer's budgeting last April has not come up to expectations, and it has been asserted, with what truth I do not know, that the revenue likely to accrue will not come up to what was hoped. If that is so, does it mean that the Government may have to draw on this Fund in order to cover up some of the faulty estimates which were made earlier in the year? Because, if they do that, they will be using it for a purpose for which it was never intended, and one to which we should very rightly object.

I should also like to have from the Financial Secretary, if he can give it to us, an assurance that the way the Bill is worded this time does not mean that the Government contemplate letting it lapse in 1953. If they did this the Fund would, of course, still continue, because, in actual fact, the original £1½ million was not voted under a Civil Contingencies Fund Act at all. It appears in an earlier Finance Act—I think in Section 52 of the Finance Act of 1921. This being so, at the end of 1953, the Government, if still in office—and we all devoutedly hope they will not be—could let the present Act lapse, and we should then be back to £1½ million as the sum total available to this Fund.

I repeat that, in the view of my hon. Friends on this side of the House, such a sum is not enough in modern conditions, remembering the extension of this Fund to many other uses than the purely temporary and relatively small items like, for example, erecting a statue to some statesman, as it has been used in the past, or to make an advance when some tragic disaster occurs, such as we had this summer at Lynmouth, and so on.

This Fund, until some other Bill is introduced to provide the same facilities in a more permanent form, performs a very useful function in helping the Government in its bulk buying and with other trading activities, and we on this side would think it a disaster if that money, which is so useful and now available, should come to an end in the fashion I have indicated by the lapse of this Act at the end of next year.

I ask the hon. Gentleman, before the evening is out, or at some convenient time, to give us the assurances for which I have asked, which we on this side think are reasonable.

7.39 p.m.

Mr. Ellis Smith (Stoke-on-Trent, South)

I do not intend to detain the House more than a few minutes, but I wish to express some uneasiness about the great change which I have seen since I became an hon. Member of this House, and in expressing that uneasiness I shall not use the extravagant language to which we were obliged to listen a few years ago when those who now occupy the Government benches sat on this side of the House. At the same time, I think Parliament needs to be concerned about the change that has been brought about.

Before the war the Government had to account for every penny spent. One of the most important functions of this House was the Parliamentary control of finance. The House had to keep an eye on expenditure and hon. Members had to reflect the grievances of the people whom they represented. One of the reasons why the people of Britain regained their confidence in the ability of democratic institutions to deal with the problems before the country and to deliver the goods was that after the war we resumed the pre-war policy upon which this House had functioned.

It appears that this House is inclined to pass this Bill merely with a wave of the hand, even though it deals with the sum of £126,500,000. We ought to be concerned about what is taking place. Throughout the country people are being subjected to a general tightening up. Demands are being made for economies wherever possible, yet at the same time we are inclined to allow a Bill of this character to go by with hardly anything being said.

I admit that I am handicapped in making these observations because, unfortunately, I was not present—and to that extent I am in the wrong—when the Financial Secretary moved the Second Reading of the Bill. However, I think that we ought to be given a detailed account showing how it is intended to use this amount of money. In future whoever occupies the position of Financial Secretary ought to consider whether a White Paper should not be issued before, or simultaneously with, the publication of the Bill, so that hon. Members can continue their function of Parliamentary control over finance.

The country is in a serious economic position. We are calling upon those in industry to make a supreme effort. They are constantly taking part in research and development with a view to increasing production. They are constantly reducing the costs of production. Unless we in this House follow their example and watch every penny of expenditure, there will not be the same confidence as there would be if we ask for an account of all expenditure so that when we voted any amount we would have a detailed knowledge of how it was intended to be used.

I thought that these brief observations should be made, and I hope that between now and next year consideration will be given to what I have said.

7.43 p.m.

Mr. Boyd-Carpenter

By leave of the House, I should like to reply to the questions which were asked. I am sorry that the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall) feels that he is being inconvenienced by the Bill being taken at this stage. I would remind him that this is an extension only for one year. I should certainly regret it if he had been inconvenienced in any way in this discussion.

I was glad when he said that we must have a Fund of this nature. I cannot, of course, give him any assurance about future legislation. He is perfectly right in saying that this proposed Bill will last until the end of 1953 and that if any further legislative action is not taken, the Fund will return to the basic £1,500,000. I cannot anticipate what steps it may be necessary for my right hon. Friend then to recommend to Parliament. It is perhaps satisfactory that that means that the whole position of the future of this Fund will be within the control of the House at that time.

Mr. Glenvil Hall

The point I was trying to make is that we shall not have been able to discuss this question on the Expiring Laws Continuance Bill, because it will not even have been in it. This is not a Bill which has ever been within that Measure. If it does come to an end at the end of 1953, it appears to me that there is nothing that the House can do about it. That will be a pity.

Mr. Boyd-Carpenter

The House would have its own resources for dealing with that matter, but I think that I can assure the right hon. Gentleman, without going beyond this, that obviously, while the practical needs which he recognises remain, any Government must make arrangements to deal with them. I do not think that he need worry very much on that score.

I agree wholeheartedly with much of what was said by the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith). I fully share his view that we should be as strict in our accounting as we can and as diligent as we can in securing proper Parliamentary control of finance. In recommending this Measure to the House, I fully share the hon. Gentleman's sentiments on that point. When we are finding it necessary to observe strict financial standards generally, it is certainly right that the Government should take their part.

Had the hon. Gentleman been in the House when I moved the Motion, he would have heard me give not only the main purposes for which the Fund is necessary but, equally, an indication of my view that we were keeping the Fund, for the very reasons he has given, at as low a level as is consistent with the practical needs of the situation.

Bill accordingly read a Second time.

Committed to a Committee of the whole House.—[Mr. Oakshott.]

Committee Tomorrow.