No deal, no end to austerity

Chancellor warns of Brexit risk to Budget as Eurosceptics accuse him of ‘bribing’ public

PHILIP HAMMOND will today use his Budget to warn that tens of billions of pounds in new public spending commitments and tax cuts will be jeopardised by a no-deal Brexit.

The Chancellor is expected to turn on the spending taps by bringing forward income tax cuts and pledging billions in funding for the NHS, roads, high streets, social care and universal credit.

His Budget is intended to mark the start of fulfilling the Prime Minister’s pledge to end austerity and show that there will be a “Brexit dividend” when a deal with the EU is struck.

However, Mr Hammond said yesterday that the spending commitments were dependent on securing a deal with the European Union in a clear warning to Eurosceptics both inside and outside the Cabinet.

He said that in the event of a no-deal Brexit he would hold an emergency Budget to redirect the £13billion worth of “fiscal firepower” to smooth Britain’s passage out of the EU.

Senior Eurosceptic Tory MPS yesterday accused the Treasury of trying to “bribe the electorate” into accepting Theresa May’s Brexit plan, which has bitterly divided the Conservative Party.

The Prime Minister is facing an open rebellion from nearly half her Cabinet amid concerns that she will sign Britain up to a customs backstop that will tie Britain indefinitely to the EU.

Mr Hammond will today announce plans to direct £2billion of the promised £20 billion-a-year funding boost for the NHS into mental health services, included dedicated mental health workers in every state school.

The Daily Telegraph disclosed at the weekend that Mr Hammond is also expected to use his Budget to bring forward rises in income tax thresholds a year earlier to April 2019 – a month after Brexit.

The Chancellor yesterday indicated that he is preparing to boost Universal Credit with hundreds of millions of pounds to help “smooth the transition” to the new system and avert a rebellion by Tory MPS.

He will also earmark a total of £28.5billion for improving motorways and other major roads from 2020-25, and a further £420million for fixing potholes.

Other spending announcements will include £500million in funding for the Armed Forces, while there are also likely to be increases in spending for policing and improving Britain’s broadband network.

Councils will be given £800million to spend on adult social care, while small retailers will be given a temporary cut in business rates worth £500 million.

Asked about his Budget plans in the event that there is no deal, the Chancellor told Sophy Ridge on Sky News that he would have to set out a “different strategy for the future”. He said: “If we don’t get a deal... we would need to take a different approach to the future of Britain’s economy. Frankly we’d need to have a new budget that set out a different strategy for the future.”

Jacob Rees-mogg, a senior Eurosceptic Tory MP, said: “The suggestion of a bribe to the electorate for obediently doing what they are told by the

‘The suggestion of a bribe to the electorate for obediently doing what they are told by the Treasury is flawed’

Treasury is flawed. He is not coming at this with a great pool of trust, he is coming at this from a Treasury that has been discredited by an anti-brexit approach. To say ‘I can do clever things if you do as you are told’ is the wrong approach.”

The Chancellor indicated that in the event of a no-deal Brexit he will hold an emergency Budget which will transform Britain into a low-tax, low tariff economy like Singapore. Describing the approach as “blindingly obvious” he told The Andrew Marr Show on BBC One: “If our businesses are no longer able to trade with EU neighbours, if their supply chains are cut off, they will have to find different markets and different ways of doing business.

“And of course the Government – any government – would want to support them in doing that and ensure that we do everything we can to facilitate what will be a very big transition in the way the UK economy works.”

Mr Hammond repeatedly declined to repeat the Prime Minister’s pledge that the Government will “end austerity” amid suggestions of mounting tensions between Downing Street and the Treasury.

He also refused to reject the suggestion that even in the event of a deal, Britain will be worse off after Brexit.

John Mcdonnell, the shadow chancellor, accused Mr Hammond of “callous complacency” over the Budget and Britain’s future.

He called on MPS across the Commons to vote down the Budget if the Government did not halt the roll-out of Universal Credit.

The implications of a no-deal Brexit, he warned, “could be catastrophic”.

Mr Mcdonnell said: “He’s gone back to what he said some time ago, which is basically he seems to have accepted a no-deal Brexit and he does want us to be like Singapore, a tax haven which will undermine our manufacturing base and, I think, put people’s living standards at risk.”