£3 BILLION TO PAVE WAY FOR BREXIT
PHILIP Hammond yesterday bowed to pressure from Cabinet Brexiteers and committed more than £3billion to ease departure from the European Union.
In a victory for Michael Gove and Boris Johnson, the Chancellor announced the cash as the first spending announcement of his Budget.
In addition, he scrapped cuts to Whitehall departments which would have reduced their spending by £2.1billion over two years.
This was put down to ‘potential new spending and administrative pressures’ in 2019-20 – the year we are to leave the EU.
It means £5billion more Brexit spending from a Chancellor who appears to have abandoned his opposition to spending on preparations, especially the possibility of a ‘no deal’ scenario.
The ministries likely to be affected most by Brexit include the Home Office – because of its responsibility for borders and immigration.
The Department for Farming, the Environment and Rural Affairs is also expected to need a significant increase in funding.
Several EU bureaucratic functions – including the management of the Common Agricultural Policy and Commons Fisheries Policy – which currently sit with Brussels will be repatriated.
The move is a further sign that the relentless squeeze some government departments have faced since 2010 could finally be coming to an end.
Mr Hammond struck a notably upbeat tone about Britain’s prospects outside the EU.
He said the economy continued to ‘confound those who seek to talk it down’ and hailed Britain’s ‘new future outside the EU’.
It would be ‘a future full of change; full of new challenges and above all full of new opportunities’ with all options covered.
He told the Commons: ‘I am setting aside over the next two years another £3billion. And I stand ready to allocate further sums if and when needed. No one should doubt our resolve.’
The new money comes on top of £700million already allocated to Brexit preparations.
It is likely to be spent on border guards to process EU nationals entering the country, on processing applications from some of the estimated three million EU citizens already living here who want to stay, and on customs arrangements.
HMRC has warned it needs money to ensure its IT systems can process the millions more customs declarations expected post-Brexit.
Mr Gove and Mr Johnson had written to Mrs May warning of the dangers of not spending on contingency plans for the breakdown of exit talks.
In a joint letter, the Brexit campaigners encouraged the Prime Minister to ‘clarify the minds’ of those not demonstrating ‘sufficient energy’ over Brexit.
The ‘Merlot Memo’ was drawn up over a bottle of red wine in September.
It praised Mrs May’s ‘sensible pragmatism’ and her desire to make Britain a ‘fully independent self-governing country by the time of the next election’.
It said: ‘If we are to counter those who wish to frustrate that end, there are ways of underlining your resolve.
‘We are profoundly worried that in some parts of Government the current preparations are not proceeding with anything like sufficient energy.
‘We have heard it argued by some that we cannot start preparations on the basis of “No Deal” because that would undermine our obligation of “sincere cooperation” with the EU. If taken seriously, that would leave us over a barrel in 2021.’
The Mail also understands that Mr Hammond was put under pressure over Brexit spending by Health Secretary Jeremy Hunt and Communities Secretary Sajid Javid at a Cabinet meeting prior to her Florence policy speech.
The Budget red book stated: ‘Given potential new spending and administrative pressures faced by departments in 2019-20, the Government has decided not to proceed with the remaining £1.1billion reduction in spending in that year.
‘Taking these changes together, departmental spending in 2019-20 will therefore be higher than envisaged at Budget 2016 by £2.1billion.’
‘Leave us over a barrel’