The Contingencies Fund Act 2020 (c. 6) is an act of the

Parliament of the United Kingdom The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body of the United Kingdom, and may also legislate for the Crown Dependencies and the British Overseas Territories. It meets at the Palace ...

that was created to increase the maximum capital of the United Kingdom's

contingency fund A contingencies fund or contingency fund is a fund for emergencies or unexpected outflows, mainly economic crises. European Union The European Union created a vast contingency fund in 2010 to counteract the Great Recession. European finance min ...

from 2%, as set out in Section 1 of the Contingencies Fund Act 1974, to 50%. It was introduced by

Chancellor of the Exchequer The chancellor of the exchequer, often abbreviated to chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and the head of HM Treasury, His Majesty's Treasury. As one of the four Great Offices of State, t ...

Rishi Sunak Rishi Sunak (born 12 May 1980) is a British politician who served as Prime Minister of the United Kingdom and Leader of the Conservative Party (UK), Leader of the Conservative Party from 2022 to 2024. Following his defeat to Keir Starmer's La ...

in response to the

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Background

The Contingencies Fund was established in 1862 by

HM Treasury His Majesty's Treasury (HM Treasury or HMT), and informally referred to as the Treasury, is the Government of the United Kingdom’s economic and finance ministry. The Treasury is responsible for public spending, financial services policy, Tax ...

. It originally consisted of a fixed amount of capital which was increased over time and by 1945 had reached £1.5 million. Before this legislation, the Contingencies Fund Act 1974 required that the permanent capital of the fund not exceed 2% of the authorised supply expenditure of the previous financial year. The fund provides cash loans to government departments. Due to the

COVID-19 Coronavirus disease 2019 (COVID-19) is a contagious disease caused by the coronavirus SARS-CoV-2. In January 2020, the disease spread worldwide, resulting in the COVID-19 pandemic. The symptoms of COVID‑19 can vary but often include fever ...

outbreak, this legislation raises the limit to 50%. This allowed government departments to be funded for extra spending prior to the next set of spending estimates coming before Parliament. Once the spending is approved the contingency fund would be repaid.

Passage through Parliament

The bill was introduced in the

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on 24 March 2020 and passed all stages in one day.

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John McDonnell John Martin McDonnell (born 8 September 1951) is a British politician who served as Shadow Chancellor of the Exchequer from 2015 to 2020. He has been the Member of Parliament (United Kingdom), Member of Parliament (MP) for Hayes and Harlington ...

announced in the

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debate that Labour would support the bill. In the same debate, Sir

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announced that the Liberal Democrats would also be supporting the bill. The bill was nodded through all stages in both the Commons and the Lords without division.

Provisions

Section 1

Increases the limit from 2% to 50%, automatically expiring on 1 April 2021.

Expiry and replacement

Though the Act was set to automatically expire, replacement legislation was introduced to Parliament in March 2021. The Contingencies Fund Act 2021 extended the limit increase for another year, but lowered it to 12%.

References

External links

* United Kingdom Acts of Parliament 2020 COVID-19 pandemic in the United Kingdom Law associated with the COVID-19 pandemic in the United Kingdom Economic responses to the COVID-19 pandemic {{UK-law-stub