Hammond’s No Deal ultimatum He warns MPs they risk years more austerity if we quit with no agreement
PHILIP Hammond will warn MPs next week they risk years more austerity if they vote to leave the EU without a deal.
The Chancellor is expected to reveal that soaring tax receipts have allowed him to build up an ‘insurance fund’ worth billions.
But if the cash is spent on countering the impact of No Deal, it won’t be available to spend on ending austerity and investing in public services.
Mr Hammond will deliver the warning during his Spring Statement on the economy next Wednesday. It will come the day after MPs vote on Mrs May’s deal and hours before a possible Commons vote on whether to leave without a deal.
Whitehall sources last night said if Mrs May’s agreement goes through, the Chancellor will set out plans for a ‘ deal dividend’, with billions poured into the UK’s public services this autumn. But if the Prime Minister’s deal is defeated, the Chancellor is expected to issue a stark warning on the risks of a No Deal exit.
‘If they vote down the deal then he will set out how he has set aside lots of headroom to deal with uncertainty,’ the source said. ‘But he will also make it clear that that money can only be spent once.
‘If it has gone on mitigating the impact of No Deal then it is not available to spend on ending austerity and investing in public services.’ The tax surplus for January alone was £15billion. Mrs May pledged last year to ‘bring austerity to an end’ after Brexit, but Mr Hammond is understood to believe this will only happen quickly if a deal is passed by Parliament. Last night business group the CBI urged MPs to unite behind Mrs May and back her Brexit deal.
John Allan, president of the employers’ organisation, warned Eurosceptic MPs that a No Deal Brexit could wipe eight per cent off the UK’s long-term growth, ‘leaving us a poorer, less competitive country’. But he also issued a warning to Remainer MPs pushing for a Brexit delay that their tactics could increase uncertainty for business, resulting in ‘more circling... perhaps only to be flung off a steeper cliff in the summer’.
Mr Allan said: ‘Delay won’t unite a divided Parliament. Delay won’t build a consensus for the future. So our message to politicians is clear – unite around the Prime Minister’s deal. Or unite around some- thing else, urgently. Something the EU will agree to and that works for the economy.’
The interventions came as ministers faced fresh questions about their ability to command a majority in the Commons after they were forced to abandon a key piece of legislation designed to protect the financial services industry in the event of a No Deal Brexit.
And a charm offensive designed to win the support of Labour MPs backfired after they complained a £1.6billion fund for ‘left behind’ towns was too little, and critics condemned it as a ‘bribe’.
Cash from the Stronger Town Funds will be distributed on a ‘needs-based’ formula to areas across England. More than 90 per cent of the cash will go to areas in the North and Midlands, leading to Tory complaints that the deal has been deliberately skewed towards Labour areas.
Shailesh Vara, the Tory MP for North-East Cambridgeshire, said: ‘It is always good news when the Government is able to provide more funding for the regions, but I’m personally disappointed that my own region is to receive such a small sum.’ Sheryll Murray, Conservative MP for South East Cornwall, criticised the fact that the entire south-west region will get just £33million, while the north- west will receive £281million.
Mrs Murray said: ‘ The fact this money appears to be directly routed to Labour-voting areas smacks of pork-barrel politics, and the public will know that. It would be a crying shame if Conservative-voting communities were being disadvantaged because of the way they voted.’ Former Treasury minister Lord O’Neill, who is vice-chairman of the Northern Powerhouse – the Government’s strategy to boost economic growth in the North of England – described the cash as ‘a pittance’.
Labour MPs sympathetic to Mrs May’s deal were also critical of the fund, which will be spent over six years.
Wigan MP Lisa Nandy said the sums on offer suggested the Government was ‘not serious’, adding: ‘I think it’s been so badly handled that it’s possible that it will cost [Mrs May] votes rather than gain them.’ Stoke MP Gareth Snell added: ‘The whole West Midlands is getting £212million – that is less than the total amount that Stoke City Council alone has had to cut from its budget in the last nine years because of austerity.’
Downing Street dismissed claims the money amounted to a bribe, saying it was ‘not conditional’ on Mrs May’s deal passing. Communities Secretary James Brokenshire, said the money would be ‘ transformative’, adding: ‘This funding is there regardless of the outcome, but obviously we want to see a deal happening, we believe that is what is in the best interests of our country.’
The decision over the £1.6billion fund follows weeks of talks between ministers and backbench Labour MPs unhappy at their party’s attempts to frustrate Brexit.
Mrs May has said the new fund was needed to address the ‘unfair spread’ of prosperity across the country. The money will be used for improving infrastructure and putting in place retraining schemes for people in traditional industries that have closed down.
‘Flung off a steeper cliff’