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

Parliament of the United Kingdom The Parliament of the United Kingdom is the supreme legislative body of the United Kingdom, the Crown Dependencies and the British Overseas Territories. It meets at the Palace of Westminster, London. It alone possesses legislative suprema ...

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. India The Constituti ...

from 2%, as set out in Section 1 of the Contingencies Fund Act 1974, to 50%. It was introduced by Chancellor of the Exchequer Rishi Sunak 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), occasionally referred to as the Exchequer, or more informally the Treasury, is a department of His Majesty's Government responsible for developing and executing the government's public finance policy and ...

. 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 a virus, the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The first known case was identified in Wuhan, China, in December 2019. The disease quickly ...

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

Commons The commons is the cultural and natural resources accessible to all members of a society, including natural materials such as air, water, and a habitable Earth. These resources are held in common even when owned privately or publicly. Commons c ...

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

Shadow Chancellor of the Exchequer The Shadow Chancellor of the Exchequer in the British Parliamentary system is the member of the Shadow Cabinet who is responsible for shadowing the Chancellor of the Exchequer. The title is given at the gift of the Leader of the Opposition and ...

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. A member of the Labour Party, he has been Member of Parliament (MP) for Hayes and Harlington since 1997. ...

announced in the

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debate that

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would support the bill. In the same debate, Sir

Ed Davey Sir Edward Jonathan Davey (born 25 December 1965) is a British politician who has served as Leader of the Liberal Democrats since 2020. He served in the Cameron–Clegg coalition as Secretary of State for Energy and Climate Change from 2012 ...

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

2020 in British law 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