Hammond’s £26bn Brexit bribe
Chancellor pleads for soft Brexit — and offers a spending bonanza in return as 3.5m jobs boom fills Treasury coffers
PHILIP Hammond yesterday made an extraordinary plea for a cross-party Brexit ‘consensus’ as he pledged to spend more than £26 billion on the economy if MPs can agree a deal.
In remarks seen as a thinly veiled call for a soft Brexit and as an appeal for compromise from Downing Street, he said there was a need to ‘ build’ agreement across the Commons on the way forward.
Speaking ahead of last night’s Commons votes – when Theresa May’s bid to keep the No Deal option on the table was rejected – the Chancellor used his Spring Statement to plead with MPs to ‘seize the opportunity’ to lift the ‘cloud of uncertainty’ hanging over the economy.
As a No 10 source played down suggestions that Mr Hammond was setting out a separate position from the Prime Minister, the Chancellor said record levels of employment had led to surging tax receipts and handed the Treasury a £26.6 billion Brexit fighting fund.
A total of 3.5 million jobs have been created since the Tories came to power in 2010, with another 600,000 expected by 2023, figures showed yesterday.
Unemployment stands at the lowest rate since the 1970s and about half that of the eurozone.
Wages are also expected to rise by more than 3 per cent each year over the next six years – easily outstripping inflation rates close to the 2 per cent target.
The forecasts, from the Office for Budget Responsibility, signal a sustained increase in living standards for millions of families as their earnings rise faster than prices.
The jobs boom is expected to drive the income tax take up to £192.4 billion in 2018-19, about £2.2 billion more than was predicted in October. Over the next six years, income taxes will bring in £24.7 billion more than was previously forecast.
The figures mean Mr Hammond has £26.6 billion of wiggle room as he seeks to meet deficit targets in 2021, giving him valuable space to cut taxes or increase public spending. The figure is £11.2 billion more than estimated in the Budget in October.
Mr Hammond yesterday warned that leaving without a deal would hit the economy, raise unemployment and lead to higher prices in the shops – and he urged compromise to find an agreement. He pledged that if the House agreed a deal, the £26.6 billion Brexit war chest could instead be spent on schools, police and roads.
But less than an hour later, he was contradicted by his deputy, Liz Truss, who said it was ‘vitally important’ that MPs ‘held their nerve’ and kept the option of No Deal on the table.
Miss Truss, who is Chief Secretary to the Treasury, also warned against any move towards a soft Brexit, such as remaining in the EU’s customs union.
In his statement, Mr Hammond told MPs that uncertainty over
‘Cloud of uncertainty’ ‘A brighter future is within our grasp’
Brexit was ‘ damaging our economy and our standing and reputation in the world’.
Urging them to remove No Deal from the table, he said: ‘Tonight, we have a choice. We can remove the threat of an imminent No Deal exit hanging over our economy.
‘A brighter future is within our grasp. Tonight, let’s take a decisive step towards seizing it and building a Britain fit for the future; a Britain the next generation will be proud to call their home.’
Mr Hammond said Britain was on the ‘road out of austerity’ but warned that the economic progress will be ‘at risk’ if a smooth and orderly exit from the EU cannot be agreed.
‘Leaving with a No Deal would mean significant disruption in the short and medium-term and a smaller, less prosperous economy in the long term, than if we leave with a deal,’ he said.
‘Higher unemployment, lower wages, higher prices in the shops – that is not what the British people voted for in June 2016.’
Mr Hammond said that if there was a Brexit deal, he will hold a full three-year Spending Review later this year, in which he will decide how to share the proceeds from any Brexit ‘deal dividend’.
Following the defeat of Theresa May’s deal on Tuesday night, Mr Hammond said there was a need to ‘start to map out a way forward towards building a consensus across this House for a deal we can collectively support’. But appearing on BBC’s Politics Live after Mr Hammond’s speech, Miss Truss said she would ignore his call to take No Deal off the table.
She said: ‘I do think that it is vitally important that we keep it on the table, we hold our nerve and keep pressure up.
‘If we extend and allow the pressure to dissipate, ultimately I fear that we won’t end up delivering Brexit at all. That would be a massive problem with public trust.’ Asked whether she agreed it was time to build a consensus across the House to get a deal through, Miss Truss said she opposed a move towards a soft Brexit, which could be in breach of the Tories’ manifesto commitments.
Instead, she called for the Prime Minister to focus her efforts on securing the support of Conservatives, the DUP and Labour MPs in Leave-backing seats.
Miss Truss said: ‘I am concerned about a consensus across the House that would involve a customs union.
‘I think one of the reasons people voted for Brexit, and one of the things on our manifesto in 2017, was that we were going to have an independent trade policy. So being part of a customs to me, does not strike the right note and deliver what we have promised.’
A No 10 source played down suggestions that the Chancellor was
setting out a separate position from the Prime Minister.
‘What the Chancellor said is consistent with what the Prime Minister said yesterday, which is that we will need to find some common ground once the House has made decisions about how it wants to go forward. I have heard the Chancellor on any number of occasions set out his very strong support for the deal the Prime Minister has negotiated. He clearly believes, as she does, that the best outcome for the country is to leave with a deal.’
Paul Johnson, director of the Institute for Fiscal Studies, said it was ‘remarkable’ that public finances continue to come in better than expected, ‘even after the big improvement forecast in October’. He said the deficit was down to ‘historically low levels’.
Yael Selfin, chief economist at KPMG, said: ‘The much anticipated Spending Review will have room for governmental spending to rise by 3 per cent if Brexit goes smoothly and if the Chancellor decides to spend all of his savings pot.
‘That will be better than he’s promised so far, but may not be enough to address UK twin challenges of low productivity and inequality completely.’
JUST when you thought Parliament couldn’t sink any lower in public esteem, it manages to plumb new depths of anarchy and ineptitude.
On a day of rebellion, deceit and betrayal, the public interest was cast aside and the whole concept of Brexit dragged towards the void.
Cabinet ministers defied a three-line Tory whip to back a motion which rejected No Deal and effectively transferred control of the EU withdrawal process from their own leader to the Commons.
But what they will do with that control is a complete mystery. There is no single Brexit plan which commands a majority and no one to lead this mutinous mob.
All they have to offer is delay and confusion. Don’t the people of Britain deserve better than this shambles?
It was another bitter humiliation for Theresa May but, typically, she conducted herself with dignity.
She’s now expected to go to Brussels to request an extension of Article 50. But she warned MPs that unless they could agree quickly on a way forward, we could be stuck in limbo for years.
Whatever people voted for in the referendum, it certainly wasn’t purgatory.
Ironically, the day had started on a hugely positive note, with the Chancellor delivering an upbeat spring statement.
Philip Hammond said he expected to have a mammoth £26.6 billion to spend next year after all bills have been paid.
Money to spend on our failing care system, to fight the knife-crime epidemic, on schools, mental health, roads, defence, tax cuts.
This cash has not come easily. It represents the huge tax contribution of Britain’s working population and the benefits of prudent spending controls.
But the tragedy is that if Parliament can’t agree a Brexit deal, all that cash, and billions more beside, could be squandered.
The omens do not look good.
Apart from being a hideous doublenegative, what does agreeing not to have No Deal actually mean? Saying you won’t do something is hardly a policy platform. It doesn’t offer an alternative Brexit plan, or point the way forward.
And it may not even succeed on its own limited terms.
As we stand, the default legal position remains that the UK still leaves the EU on March 29, with or without a deal. We may be able to get the date pushed back – assuming Brussels deigns to allow it – but that will not solve the issue.
The only sure way of averting No Deal is to have a deal. And for all the vainglorious rhetoric of the wreckers, the only deal on the table remains the May deal.
The alternative is no Brexit, and that came closer than ever last night.
So in pursuit of the perfect, rebel hardliners of the European Research Group have not merely sacrificed the good, they have ushered in the very thing they feared most. What a farce.
Still, it may not be too late to repent. Attorney General Geoffrey Cox was trying yesterday to persuade the Democratic Unionists that there is a solution to the backstop crisis and some ERG members are said to be softening.
Their Plan B – the ‘managed’ No Deal scheme known as the Malthouse Compromise – was comprehensively trashed by the Commons yesterday. So frankly, they have nowhere left to go.
Word from Downing Street suggests the Prime Minister plans to bring her withdrawal agreement back to the Commons for a third time next week. The odds of success are not great, but if the ERG and DUP wake up to reality it could yet squeeze through.
The May deal may be wheezing in the resuscitation room – but it’s not dead yet. It remains the best chance of an honourable solution to this endless farrago.