May’s ‘£40bn offer’ to get Brexit moving

THERESA May’s Brexit ‘war cabinet’ has agreed to offer billions more in EU divorce payments in return for a free trade deal.

Brussels sources had indicated they would not consider opening talks unless the UK hands over about £ 40billion – double the amount previously suggested by the Prime Minister.

The plan for an increased offer – which is set to prompt a Tory revolt – comes after ten key ministers met amid tight secrecy in Downing Street, ahead of a crunch summit next month.

Sources suggested they had agreed to raise the offer to the EU, but only in return for assurances on a future trade deal. Precise figures were not discussed in yesterday’s two-hour meeting – and the final sum would only be agreed once a trade deal has been struck.

The move represents an uneasy compromise between Remainers led by Philip Hammond and pro-Brexit ministers led by Boris Johnson, who told Mrs May he could not accept a ‘unilateral’ offer unless it came with guarantees on our future relationship with the EU.

The prospect of a bigger divorce payment sparked anger on the Tory benches last night. MPs warned that, with the Budget taking place tomorrow, the Government risks a public backlash if it hands billions to Brussels as austerity continues at home.

Others pointed to chaos in Germany, where Angela Merkel has failed to strike a deal to form a coalition government. Tory MP Jacob Rees-Mogg said it would be ‘foolish’ to improve Britain’s offer to the EU when Mrs Merkel is facing a second election within a matter of weeks.

Former Tory leader Iain Duncan Smith said the PM had made a ‘generous offer’ of £20billion in her speech in Florence in September. ‘We should not be offering any more money at this stage,’ he stressed. ‘Negotiation is about strength and courage and we have to make sure we don’t give in every time they ask for more. This week the Chancellor will stand up and tell us we need to get the deficit down and can’t make any spending commitments, while on the other hand saying we are going to give the EU more money. Voters will ask, why is the EU more important than them?’

Fellow Tory Nigel Evans said the PM should resist ‘ ransom’ demands from the EU. He urged her to show the same ‘steel’ as Margaret Thatcher did when negotiating Britain’s rebate in the Eighties, adding: ‘We cannot play Santa for Juncker, and Scrooge for public services. The public will not accept it and they are right not to.’

Even pro-Remain Tories voiced doubts. Former minister Robert Halfon said: ‘If we start saying that we’re going to give £40billion to the EU, I think the public will go bananas, absolutely spare.’

Downing Street remained tightlipped about the outcome of yesterday’s meeting, but a source said: ‘It remains our position that nothing’s agreed until everything’s agreed in negotiations with the EU. As the Prime Minister said this morning, the UK and the EU should step forward together.’ Another insider insisted the agreement was ‘not about dangling a carrot’ in front of Brussels.

‘If we move it will be because they are moving – we will move together,’ the source said. Speaking ahead of the meeting, the Prime Minister said she had already made it clear the UK would ‘honour our commitments’ made during years of EU membership. She will now discuss the new divorce bill offer with European Council president Donald Tusk on Friday.

She hopes to strike a deal that will see Brussels agree to open formal trade talks next month, in return for greater ‘clarity’ from the UK on the divorce bill. Yesterday’s meeting also saw lengthy discussion of the continuing differences with Brussels over the future of the Northern Ireland border and the status of EU citizens. Sources played down reports that ministers had agreed to give the European Court of Justice jurisdiction over the rights of EU citizens in the UK after Brexit.

Two key EU watchdogs will move from London to Paris and Amsterdam, it was announced last night. The European Medicines Agency will relocate to the Dutch capital after Brexit. The European Banking Agency will shift to France. Both employ about 1,000 staff in London.

‘I think the public will go bananas’