§ 3.16 p.m.
§ Order of the Day for the Second Reading read.
§ THE EARL OF SELKIRK
My Lords, this is a very short Bill and it is a certified Bill. I think, however, the House would like me to make as clear an exposition as I can of the purpose which it is intended to achieve. The history of the Civil Contingencies Fund goes back some ninety years. This Fund, after rising to some dimensions in the First World War, was reduced in 1921 to £1½ million by the Finance Act of that year. When war broke out in 1939, the military and civil expenditure—which, of course, was incurred on a fairly large scale—was met by Votes of Credit, and at that time there was no increase of the Civil Contingencies Fund. However, after the war, when the whole field of supply expenditure was again brought under the more normal system of Votes estimated in detail beforehand and covered by Appropriation Acts, it was found desirable to extend the Civil Contingencies Fund, and this was, of course, associated with the very considerable increase in the range of functions of Government activity, particularly Government trading. By 1946, by the Miscellaneous Financial Provisions Act, the figure of the Fund was set at £251,500,000, and in 1950, by an Act of the same name, it was reduced to £126,500,000. That is the figure which has remained in force until the end of this year, and it is this figure which this Bill now seeks to extend for another year.
I think the first question anyone would ask would be: Just what is this Fund used for? It is not easy to give an answer in a few words, because its uses are extremely varied. I should like to draw the three broad, main purposes for which the Bill is used. The first is what may be described as a sudden and unexpected emergency; and a ready example of that is the Lynmouth disaster. Earlier last year there was a similar experience in Orkney, when relief was granted at rather short notice, which in these cases is, of course, of great importance. In these cases the Civil Contingencies Fund forms a reservoir enabling the Government to meet the immediate expenditure which will subsequently be voted by Parliament in the ordinary way. I do not pretend, 764 however, that under this category the sums involved are, in fact, very large.
The second category, however, is of much greater magnitude. These are the operations of Departments of State who are trading in their own right—mainly the Ministries of Food and of Materials—turning over perhaps many hundreds of millions of pounds in the course of the year. I think it is abundantly clear that it would be no more than a coincidence if the payments by these Departments went out on the same dates as the receipts came in, either month by month or, more important, year by year. These points do not coincide. Accordingly it is necessary to cover that period by advances from this Fund. This does not mean that necessarily there is a trading loss—indeed, there may be a profit—but the point which is relevant is that there are changes in the debtor/creditor position of their trading stocks and the movements of prices from month to month, which may mean that the Departments will not always manage to have in hand the sums necessary to meet their financial requirements. In such cases the normal procedure is to get advances from the Civil Contingencies Fund in order to finance their temporary deficit, which will subsequently be repaid by higher receipts later in the year. If in fact an actual cash deficit does result, it will be repaid by Supplementary Estimate. This will be the case with the Ministry of Materials during the current year because of a drop in their sales.
A third general category of advances was mentioned by the Chancellor of the Exchequer during the debate on the Address. He indicated that this year there would be some substantial overspending on the Ministry of Supply Vote and that this would be met by advances from the Civil Contingencies Fund pending the presenting and voting of Supplementary Estimates after Christmas. In other words, the Fund will be used as a means of temporary finance, pending the approval of Supplementary Estimates and before it is possible to get a good enough figure for the Supplementary Estimates to be placed before Parliament. I must emphasise that in these cases, as indeed in all cases, advances from the Fund are authorised only after very careful consideration by the Treasury; and it by no means follows that a Department which expects to be short of cash for any 765 reason can feel any assurance that they will be assisted from the Civil Contingencies Fund.
This Bill seeks to extend for one year the figure of £126½ million as the total available for the Civil Contingencies Fund. This sum is made up of £1½ million capital voted under the 1921 Finance Act, plus a temporary increase of £125 million. In considering whether this figure is the correct sum or not, the important consideration is not so much the total turnover of the Fund in the course of the year but the peak demand at any one time. Last year the turnover was £160 million. In 1950–51 the peak demand was £108 million and in 1951–52 it was £92 million. The highest so far this year was in July, when the figure was £65 million. In consideration of these sums it is not felt that the Fund could safely be set at a lower figure. If I may take the peak month in the last year and explain how these figures were reached, it will give some idea of the working of the Fund. Take March, 1952, when the peak of £92 million was reached: in that month by far the largest sum was taken up by advances to Departments which had found it necessary in the spring to request Supplementary Estimates. It is only towards the end of March that Parliament passes the Consolidated Fund Bill and the Royal Assent is given; and it is therefore only at the end of that month that new cash becomes available to the Treasury and thus to the Departments to meet their additional expenditure. But in the few weeks up to the end of March additional expenditure which is being incurred has somehow to be met, and this is done by advances at the discretion of the Treasury. March is the critical month and a critical situation may arise at any time before the Consolidated Fund Bill becomes law.
The principal Departments concerned this spring—that is, in March this year—were the Ministry of Food in connection with their trading services, principally because their trading stocks had increased more than expected, and the Ministry of Supply for expenditure on the rearmament programme which was announced in the summer of 1951. There was also an advance by way of economic aid to Yugoslavia and one to the Post Office in advance of the Supplementary Estimates. In the present financial year substantial calls are likely to be made on the Fund 766 by the Ministry of Materials in connection with their trading and the Ministry of Supply in connection with rearmament.
I should perhaps emphasise two things: first, that no money lies in this Fund except for very small balances, and it is only paid into the Fund from the Consolidated Fund when it is required; and secondly, the Fund does not authorise, except on a temporary basis, payments for any purpose. All payments have to be covered normally in the same financial year by a Parliamentary Vote, and repaid to the Fund. We are therefore concerned here only with the mechanism of making temporary advances and not with the nature and extent of Government expenditure as such. The House will observe that the extension of the period during which this Fund will operate is only one year; previously since the war it has been for periods of four and two years. I can assure the House that before it is brought to the consideration of Parliament next year it will again be carefully considered to see whether the total figure at the present time is too great. I beg to move.
§ Moved, That the Bill be now read 2a. —(The Earl of Selkirk.)
§ 3.26 p.m.
§ LORD PETHICK-LAWRENCE
My Lords, I do not rise on behalf of my noble friends on this side of the House to oppose the Second Reading of this Bill. The purposes of the measure have been admirably set forth by the noble Earl, and I myself fully endorse the value of this Bill to the financial apparatus of this country. The noble Earl gave us an interesting account of the history of this measure. It was quite a correct account, so far as it went, but the noble Earl conveniently omitted to mention, in the course of his historical discussion, that Her Majesty's Government, when it was composed of my noble friends on this side, introduced a Bill for precisely the amount for which the noble Earl is introducing it in your Lordships' House to-day. It encountered considerable opposition from his friends in the other place; they took exception to entrusting my noble friends with the large sum, which is a kind of pocket money to be accounted for after, instead of before, its expenditure. They took exception to so large a sum of money being in the hands of the Chancellor of the Exchequer of that day, and explained that it was part of the 767 machinations of the wicked Labour Party, who wanted to carry out large transactions which would be handled better by private enterprise. The noble Earl has conveniently omitted those facts. I recall them more for the amusement than for the edification of the House. I shall not follow their bad example; and noble Lords on these Benches support the Second Reading of this Bill.
§ THE EARL OF SELKIRK
My Lords, I thank the noble Lord for his kindly words in welcoming this Bill. I think it is within the memory of this House that the principle that it is the duty of the Opposition to oppose, no matter where they sit, has been clearly emphasised in recent days.
§ On Question, Bill read 2a; Committee negatived.