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Exiting the EU: Costs

Volume 632: debated on Wednesday 29 November 2017

(Urgent Question): To ask the Chancellor of the Exchequer to update the House on the expected costs of exiting the European Union.

Our negotiating team is currently in Brussels discussing our exit from the European Union—in fact, our officials have been working on it for months. It would be completely wrong of me to cut across those discussions by commenting on speculation about the financial settlement, and it would not be in our national interest.

The Prime Minister made it clear in her Florence speech that EU member states would not need to pay more, or to receive less money, over the remainder of the current budget period as a result of our decision to leave. She also made it clear that, in the spirit of our future partnership, the UK will honour its commitments made during its period of membership. As we have said before, nothing is agreed until everything is agreed. Any settlement that we make is contingent on us securing a suitable outcome, as outlined by the Prime Minister in her Florence speech. We will meet our commitments and also get a good deal for the UK taxpayer.

We want to see progress towards our preferred option, which is an implementation period followed by an ambitious future economic partnership. In the Budget, we have set aside £3 billion, in addition to the £700 million that we have already allocated, to make sure that our country is fully prepared for all eventualities. What we have seen today is simply media speculation. We will update the House when there is more detail to give.

The British people were promised a dividend from Brexit. They were told that leaving the EU would save us a fortune. Those who campaigned for Brexit daubed their hubris across the side of a giant red bus, promising a windfall of £350 million every week for the NHS. That was not just a whopping lie, but the direct opposite of the truth.

Will the Chief Secretary confirm that if the divorce bill comes in at somewhere between £40 billion and £67 billion, as is speculated, that could be a payment of £1,000 from every man, woman and child in this country? Is this speculated divorce bill not just the tip of the iceberg? If we are being honest about the true costs of Brexit, should we not also add in the lost revenues to the Exchequer set out in the Red Book—something in the order of £20 billion by 2021—the £3.7 billion of Brexit preparations for all the duplicated agencies, new border arrangements, lorry parks in Dover and so forth, and of course the higher cost of living for all of our constituents as prices keep on rising?

How do the Chief Secretary’s constituents react to the idea that they will be lumbered with all these extra costs? Do they not ask her, “What exactly are we getting for this? What wondrous new advantages will we gain by shelling out these astronomical sums?” Will she not be straight with the House that we are paying for the privilege of putting the world’s most efficient free trade, tariff-free, frictionless agreement into the bin, and being told to pay for the privilege of downgrading to an inferior deal with our European neighbours? Why is she being so coy about the deal that is being done? The Government have gone from “go whistle” to “where do we sign?”

In a week when the Government will still not fully publish the Brexit impact assessment papers to this House, we are now hearing rumours that Parliament and the public may never be told the full amount. When will Parliament be told what is actually happening and will we get a vote on the sums of money involved? Will the Chief Secretary, right here and right now, scotch this nonsense that the true costs of Brexit will be hidden away in a convenient backroom deal in the negotiations? The British people need to know whether there is a deal and how much the Government have put on the table in the negotiations. If she will not tell us, why does she think that the only people who cannot be told are the British public and the British Parliament? This is not what the British public voted for in the referendum. It is not taking back control; it is losing control.

I can tell the hon. Gentleman what my constituents say: “The country has voted to leave the European Union.” What they want to see is us getting on with that and securing the best possible deal for Britain. If we look at the Opposition Benches, we can see Members who, like the hon. Gentleman, voted to stay in the single market and the customs union, and we also see Opposition Front Benchers who voted to leave the single market and the customs union. Today we read that the shadow Home Secretary wants a second referendum. That is not remotely helpful in securing the best possible deal.

The hon. Gentleman knows perfectly well that we are in negotiations as we speak. If we were to talk about numbers and aspects of the deal in this House, we would be cutting across our negotiating position. The people of Britain want us to get on with it, to take the advantages of leaving the European Union, to make the most of the opportunities and to secure the best possible deal. We are well on the way to doing that. I suggest that, rather than trying to refight the referendum battle, which is exactly what the hon. Gentleman seems to be doing, he needs to get with the programme and to start talking about how he can be helpful.

Does my right hon. Friend agree that no Government of any EU member state could possibly be expected to agree that we should have a good future trade and economic relationship with the European Union while, at the same time, we repudiate all our past financial obligations and somehow refuse to pay a fair share of the costs of agencies and so on that will be incurred in the future? Does she therefore agree that those who oppose paying any money presumably want a no-deal Brexit, which would be catastrophic for this country, and would stop the opportunity that my right hon. Friend the Secretary of State for Exiting the European Union has of negotiating a deal that retains as many benefits as possible for jobs, investment and the growth of this country’s economy?

As the Prime Minister laid out in her Florence speech, we do want to abide by the commitments we made during our period of membership, and we also want to see progress on securing a deal. My right hon. and learned Friend is right that any settlement that we seek to achieve has to be contingent on getting a suitable outcome from the negotiations, as has been outlined by the Prime Minister, because we want to ensure that any money spent is value for money for the British taxpayer.

I thank my hon. Friend the Member for Nottingham East (Mr Leslie) for raising this critical question.

As we all know, settling this issue is vital to continuing to the next part of the negotiations. Given that progress has been so much slower than we would have hoped, the Opposition support efforts to resolve this part of the negotiations as soon as is feasible, so that we can start to make progress to end the uncertainty that is impacting on jobs and the economy.

The financial settlement with the EU must meet our international obligations while delivering a fair deal for British taxpayers. The UK is a responsible country and there is no mileage in our refusing to meet our obligations. If we are to negotiate a comprehensive new trade agreement with the European Union, which we will need for future jobs and prosperity, we must be seen as a country that can be trusted to comply with the deals that we reach.

Given our long-standing membership of the European Union, the calculation will understandably be complex. Given that this is a sensitive part of the negotiations, we appreciate that the Government cannot announce a figure publicly at this stage, but they must be transparent about the process, especially once an understanding has been reached with our EU partners. That is why we have tabled an amendment to the European Union (Withdrawal) Bill that calls for any financial settlement to be assessed by the Office for Budget Responsibility and the National Audit Office, and for Parliament to have the chance to scrutinise it. The Government’s handling of the presentation of the impact assessment studies to Parliament has left a lot to be desired, so may I ask the Chief Secretary to the Treasury to promise that, in the interests of transparency and clarity, the Government will support that amendment?

I thank the hon. Gentleman for his supportive comments. I am glad that he agrees with the Government’s strategy. The next step will be making sure that his Back-Bench colleagues also agree with his strategy. He is absolutely right that we should not reveal the details of negotiations while they are ongoing. However, the Opposition’s approach of saying that any deal is better than no deal is not the best way of securing a deal. Although our preferred option is an implementation period followed by a strong agreement, we are preparing for all eventualities, which is why we are putting in £3 billion. I suggest that the Opposition should also support that very responsible approach.

I am not in favour of anything that is not legal, so I support my right hon. Friend completely. I am also in line with my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), in that whatever the legal agreement is, bound against the contingency of a free trade arrangement, it is exactly what the Government will set out to do. Will the Chief Secretary please remind those who have raised this question that even if we agreed a figure of something in the order of £40 billion over 40 years, because we will not be paying contributions to the European Union, it means that the UK Exchequer will be better off by £360 million in the course of those 40 years—a net gain, with a free trade arrangement?

My right hon. Friend makes a very fair point. Whatever happens, we will not be paying anything like what we would have paid as an EU member. That represents a considerable saving to the British taxpayer.

I thank the hon. Member for Nottingham East (Mr Leslie) for bringing this matter to the House.

There would be no newspaper rumours about the sum if the Government actually told us what the sum was. Nobody voted for this disastrous, disorganised EU exit. People voted for £350 million a week for the NHS, not to spend £40 billion or £50 billion just to be worse off. Our public services must not pay the price for this Brexit mess. It surprised us all when the Prime Minister found a magic money tree earlier this year, so surely the Government cannot have been lucky enough to find two. Given that last week’s Budget did not make provision for this £40 billion or £50 billion, will the Chancellor now bring forward an emergency Budget to explain where he is finding the money?

When the hon. Lady stood up, I thought that she was going to thank the Government for the £2 billion additional spending power that we gave to the Scottish Government in the Budget, which they will no doubt be able to use to improve their public services. As I have said before—and, indeed, as has been pointed out by the hon. Member for Stalybridge and Hyde (Jonathan Reynolds)—talking about the money now would cut across the negotiations and prevent us from getting the best possible deal. That is not in anyone’s interests.

I am glad that the Government have confirmed today that they are carrying on with comprehensive preparations for no deal, because it is very important that we are not up against the clock at the end and forced into a bad deal because we have no alternative. Will the Chief Secretary confirm that no deal has the great advantage of no payments whatever under the divorce bill heading, meaning that when the Government recommend a deal, it has to be visibly better?

My right hon. Friend is correct. It is irresponsible for Opposition Front Benchers to suggest that any deal is better than no deal. That is the way that we will not get our preferred option, which is an implementation period plus our preferred economic partnership. We are allocating £3 billion to ensure that we are prepared for all eventualities.

The United Kingdom is currently a member of a large number of EU agencies, from that dealing with aviation safety to the European Medicines Agency. Have the Government made an assessment of the likely cost to the Exchequer of having to replicate all those functions and activities, if they eventually decide that we have to leave all of them because of their stated principled objection to the European Court of Justice having any jurisdiction over the United Kingdom?

I have been very clear with the House that we are preparing for all eventualities. Of course, looking at the specifics of those agencies is a part of that.

As my right hon. Friend pointed out, the Prime Minister made a fair and generous offer to the European Union in her Florence speech. Given that article 50 provides that the negotiations that are under way should take account of the future relationship between the United Kingdom and the European Union, does my right hon. Friend agree that it is high time that the European Union reciprocated and started adhering to its obligations under the treaty?

As my right hon. Friend points out, it is important that we move on to the next stage of the negotiations and talk about our long-term relationship with the European Union once we have left. That is exactly what we seek to do.

The problem with the Chief Secretary’s answer is that all our constituents saw the slogan on the side of a bus. If the Government simply say nothing—if they keep radio silence for a long time—and then suddenly pluck a figure out of a hat at the end of the process, it will just be incomprehensible to everyone. Surely she can tell the House the kinds of things that the Government think they should be funding—pension contributions or whatever else—rather than just leaving everyone in the dark.

I refer the right hon. Lady to the Prime Minister’s Florence speech, in which she laid out the commitments that we want to continue to honour, in the spirit of our future partnership, after we have left the European Union. The right hon. Lady has to be aware that this is part of a discussion that is also about our future relationship, and all those elements are contingent on securing our future relationship, as the Prime Minister laid out in her Florence speech. It would be wrong at this stage—from the point of view of not only the negotiations, but transparency to the public—to lay out something before it is fully agreed. That would not be helpful.

To cheer up the miseries on the Opposition Benches, perhaps they would like to look at the prospective budget published by Economists for Free Trade in the week before the Budget. It is a really exciting prospectus that says that our economy will grow at 3% a year by 2025, providing an infrastructure surplus of £60 billion, which easily covers the £18.2 billion a year for the famous £350 million. But that is contingent on reciprocal free trade with zero tariffs, so will my right hon. Friend guarantee that there will be no legally binding commitment to spend money until our partners agree to a serious free trade deal that is based on reciprocal free trade and zero tariffs?

I fear that my right hon. Friend is over-optimistic if he thinks we can stop Opposition Members from being miserable. We tried that over four days of Budget debate, but we have been unsuccessful so far. He is absolutely right to talk about the benefits of free trade for the British economy—I completely agree with him. We are seeking a good deal that benefits the UK in the long term.

At least £45 billion, higher inflation and debt, an extra year of cuts, and less influence in the world are the price that the Government are willing to pay for a deluded vision of Great Britain post Brexit. Is there any level of damage that the economy, jobs and families in the UK would have to sustain that would cause the Government to rethink and give the people a vote on the deal? That would be supported by the Liberal Democrats and Sadiq Khan, the London Mayor—and, as I understand it now, the shadow Home Secretary.

I see, regrettably, that the misery has spread to the Liberal Democrats; there seems to be a contagion on the Opposition Benches. I invite the right hon. Gentleman to welcome the fact that this country has the lowest unemployment in 40 years. We also have the third highest number of start-ups in the world—a record number for this country—and the other positive benefits that we are seeing due to the actions of this Conservative Government.

Most of us—certainly those of us on the Conservative Benches—accept that a good trade deal is better than no deal, that there is always give and take in a negotiation, and that it is important that we meet our financial commitments. However, does the Minister accept that this issue is largely a storm in a teacup, because nothing is agreed until everything is agreed? It is important to make that point and not to listen to the few siren voices who still refuse to accept the result of the referendum.

My hon. Friend is right. Regrettably, there are people—particularly on the Opposition Benches—who still do not seem to accept democracy and that fact that people did vote to leave the European Union.

The thing is that the Government are keeping their cards so close to their chest that I suspect they have not even looked at them themselves. For that matter, the left hand certainly does not know what the right hand is doing, because the Minister is obviously making it clear that we are going to pay lots of money for a no-deal outcome, yet the Foreign Secretary boldly and quite confidently told this House that our foreign counterparts could “go whistle”. What was he suggesting that they should whistle—“Stand and deliver your money or your life”?

The hon. Gentleman will be aware that considerable work is taking place across Government, but it would be wrong to cut across our negotiators in the deal they are seeking to strike. It is in our country’s interests to reach the point where we are talking about our long-term economic relationship with the European Union.

My right hon. Friend should not pay more than we owe, but she should be confident that, whatever that is, it is a bargain against the cost of staying in.

My right hon. Friend makes a good point. Were we to stay in, the costs would be considerably higher than any amount we are talking about as part of our negotiations.

The Government are so intent on keeping information they have about Brexit secret that they are actually risking contempt of Parliament. As this even more secret financial settlement is negotiated, how can we be sure that it really represents the national interest?

As I have pointed out already, these negotiations are not yet complete—there is not a number that we can disclose to the House. Absolutely, when there is one, and when there is more detail to give, we will come to the House and talk about it.

Does my right hon. Friend agree that, following a good Budget, and given the need for good housekeeping and the pressures on public spending, if the impression is given that we have wads of cash when it comes to Europe, that undermines our arguments on the public sector and on the need for good housekeeping, especially since the House of Lords says that we have no legal financial obligations? Does she not also agree that this is not a divorce bill? We are leaving a club, and once someone leaves a club, they no longer have to pay subscriptions.

First, we were able to make sure that we stuck within our fiscal rules at the Budget, making sure that debt is falling as a proportion of GDP for the first time in 13 years, and keeping within our deficit targets. At the same time, we were able to freeze fuel duty to help ordinary working people, who need to keep their living costs down. We were able to do all those things. The reality is that, as we leave the European Union, we will no longer be paying those vast sums in, and that will represent a benefit to the taxpayer.

Is the Minister aware that 70% of the people who voted in Bolsover voted to leave? But let me also say this to her: those same people in Bolsover, I believe, would expect me to tell the right hon. Lady from the finance Department that if the Government have £60 billion to spare, it should go to the national health service and social care.

The hon. Gentleman will be well aware that, as part of last week’s Budget, we were able to put additional money into the national health service—into hospital capital and making sure we hit our A&E targets—and we are also allocating money to help with nurses’ pay. The hon. Gentleman will no doubt be pleased about that.

These negotiations remind me of the even more complex ones on arms reductions in the 1980s. Will the Minister bear it in mind that the lessons of those negotiations were, first, that too many one-sided concessions project an image of weakness and, secondly, that to get the very best deal, we often have to walk away first and wait for the other side to agree with us, come back, sit down and negotiate realistically?

It is because we need to make sure that the European Union is aware we have alternatives that we are preparing not only for our preferred option of a transition period plus a long-term economic agreement, but for a no-deal scenario. The Opposition want to give that option away, so we would not be able to have that discussion with the European Union.

There are two salient features about the news that is emerging. The first is that this is the opposite of what was promised during the referendum. We were promised £350 million a week more, and now the Government are set to pay up to £50 billion, when our constituents urgently need money for health, housing, policing and much more. But, secondly, what is it that we are paying for? Other countries pay significant sums to get into the single market; we are lining up to pay up to £50 billion to leave the single market. Is not the tragedy that these huge sums are going to pay for a worse deal than we have at present? That is hardly strategic genius.

It is absolutely right that the UK honours its commitments in the spirit of our future partnership, but as I have said before, nothing is agreed until everything is agreed. We will expect to make progress and secure that long-term economic partnership, which will be to the benefit of UK citizens.

Will my right hon. Friend note the growing concern at the fact that Her Majesty’s Government seem in these negotiations to be dancing to the tune of the European Commission? Further to the question from my right hon. Friend the Member for North Shropshire (Mr Paterson), may I also ask whether she can be certain that, after 29 March 2019, we will make no payments to the European Union whatever in the absence of a full agreement covering trade?

I can assure my hon. Friend that we are not dancing to anyone’s tune. What we care about is the future of Britain’s economy, protecting the British taxpayer from excess payments and making sure we secure a good deal, which is why it is so important that we do not discuss these numbers while we are in the middle of a very important negotiation.

I have been informed by a former public finances auditor that international accounting standard 37, on provisions, contingent liabilities and contingent assets, requires the UK Government to account for the divorce payment as expenditure in their public finances—even if the exact amount cannot be calculated. Given that the Government accounts for 2016-17 did not adequately disclose the potential liability, as required by IAS 37, will the Minister give assurances that a liability of this magnitude will now be included in the supplementary estimates for 2017-18 and that that provision will be subject to a vote of this House?

That would be wrong according to accounting principles, because nothing has been agreed. The Office for Budget Responsibility followed the Prime Minister’s Florence speech in laying out its projections for the Budget. I suggest to the hon. Gentleman that he has misinterpreted those standards.

Will my right hon. Friend confirm that she agrees that the UK should pay the EU what we are legally obliged to pay—not a penny more and not a penny less? If so, will she make sure that, before this House votes on the final bill, we have an itemised account of exactly what we are paying for at the end, and also the legal basis on which we are making those payments? I have to say that the hon. Member for Bolsover (Mr Skinner) is absolutely right: if there is any spare money going at a time of austerity, it should be directed to our priorities in the UK; we should not give it as a bung to the European Union, which we are not legally obliged to do.

I can assure my hon. Friend that we are determined to get the best possible deal for the British taxpayer, and we need to look at the deal in the round to see what represents value for money. Absolutely, the money should be spent on our public services and on keeping taxes low for our hard-working citizens.

Last week, the Treasury published the Red Book, which showed that there would be no more payments to EU institutions from 2019. It also said there was £15 billion of headroom and that debt would then fall. Does the news overnight not show that there is a £30 billion hole in the public finances and that there is no possibility of debt falling on that timescale?

The hon. Lady is not correct about that. The OBR has made predictions on EU payments and those are included in the Budget. Indeed, that was raised by my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) in the Budget debate last week.

Will the Chief Secretary please confirm that any payments that are offered will be itemised, so that Parliament can understand the constitution of the payment and put it into the context of any likely conditioning that may be required in any deal on the future relationship?

I assure my hon. Friend that the payments that will potentially be made—as we have discussed, nothing is agreed until everything is agreed—will absolutely provide value for money.

My hon. Friend the Member for Nottingham East (Mr Leslie) is right in his question to highlight the serious difficulties the country faces. I hope it is true that agreement has been reached on the costs of exit, so that the negotiations can move on to the next stage. Does the right hon. Lady agree that it is essential to the UK’s national interest that the European Council agrees at its meeting next month that enough progress has been made to move on to discussions about future trade?

We absolutely want to secure movement on to the next stage of the negotiations. That is very important. Ultimately, it takes the UK and the EU27 to agree on that. It would be wrong to take the approach of the Opposition and say that we would agree to any deal, regardless of what it was. We have to look at and prepare for all eventualities.

Does my right hon. Friend agree that the message to the doom-mongers must be that the British public have given their verdict and expect Parliament to deliver? The doom-mongers should recognise that we are the fifth strongest economy in the world and that our population is significantly greater than that of 15 EU countries put together. It is high time that they started talking Britain up, rather than talking it down.

My hon. Friend is right. The Opposition refuse to see any of the positive things that are happening in our country, whether it is the lowest youth unemployment rate for over 13 years or the highest number of new start-ups this country has ever seen. Great things are happening, so let us see a bit more optimism from the Opposition.

People in the Black country voted to leave, but they were not told at any point that it could cost them £1 billion a week. They certainly were not told that it could make them worse off. If it is the case, as we have been told, that we will be much better off as a result of leaving and that there will be considerable savings, as the right hon. Lady promised a moment ago, will she promise that those savings will be used to replace the programmes that are currently funded by the EU, such as the crucial £50 million-a-year skills programme that operates in the Black country?

There will be savings once we leave the European Union, as I have made clear. We want to ensure that those savings are spent in the best interests of everybody in the UK to make our country as successful as it can be.

The Chief Secretary will be very aware that her constituents and mine voted overwhelmingly to leave. Does she agree that it feels on the ground as though most people now want to get on with Brexit, but also that they expect the UK to be fair, generous and magnanimous, so long as the financial settlement is contingent on a free trade deal?

As my hon. Friend points out, the people of Norfolk are fair minded. They want the referendum result to be respected and they want to honour our commitments to the European Union, but they want that to happen in a way that is fair for Britain and British taxpayers and that ensures that we get the best possible deal.

The figures are astronomical. Is it not the case that the British public are already paying the costs of this Government’s approach to Brexit in the form of the £3 billion that the Chancellor announced in the Budget would be spent on Brexit contingencies and the more than £700 million that he has already shelled out? Should people not have been told about that before the referendum?

It is completely irresponsible of the Opposition to suggest that we should not prepare for all eventualities. It would be disgraceful for the Government not to do that. That would not be the proper action of a responsible Government.

For the first time in my parliamentary career, I agree with the hon. Member for Bolsover (Mr Skinner). He is absolutely right. The 60%-odd of people in Wellingborough who voted to leave would want to know what we were doing with £60 billion. They would want it to be spent on the NHS, social care and defence. They would not want it to be given to the European Union. Does the Chief Secretary agree that such a move would betray the trust of the British people?

The amounts of money we have read about in the press are speculation. The negotiations are ongoing and we want to secure value for money for the British taxpayer. It is in our interest to secure a long-term economic partnership with the European Union, but we will not pay over money until everything is agreed.

Page 25 of the Government’s brand new industrial strategy document states that the Government are seeking a transition—sorry, an implementation period—of “around two years”. Does the reported deal include provision to pay for an extended deal beyond two years?

The negotiations are taking place at the moment. We want to secure a reasonable transition deal, but we have to know what the future relationship will be like before we enter into the transition deal. The British public will not accept the can being kicked down the road. They want to know that we are leaving the European Union.

The greatest risk to the new partnership that both the UK and the EU want is that the EU makes such unreasonable demands that no British Government could accept them, on the wrong assumption that this House will never vote for no deal. Does my right hon. Friend therefore agree that all Members who want a good deal, like the hon. Members for Nottingham East (Mr Leslie), for Dudley North (Ian Austin) and for Cardiff South and Penarth (Stephen Doughty) and the right hon. Member for Wolverhampton South East (Mr McFadden), should make it absolutely clear to their constituents that they do not subscribe to the ludicrous idea that any deal is better than no deal?

I fear that Opposition Members have not made that logical leap yet, but I am sure that my hon. Friend’s question will have helped them reconsider in their own minds.

Extraordinary behaviour! It is good of the hon. Member for Reading East (Matt Rodda) to drop in on us.

Can the right hon. Lady name any moment in any aspect of the negotiations so far when the Government have gone head to head with the EU27 on an issue on which they have competing ideas about what to do and come out on top? Is this not yet another example of the Government crumbling and facing up to the reality of leaving the EU?

We are making continuous progress in our negotiations with the EU. Of course, in any negotiation there has to be give and take from both sides. That is exactly what is happening. However, it would be wrong to expose the details of the negotiations at this stage.

In any divorce, the assets are divided. Given that in today’s money—in real terms—our net contribution to the EU over the lifetime of our membership amounts to £209 billion, will my right hon. Friend make sure that we get our fair share of the EU’s assets when we leave?

Before making a big decision, it is generally sensible to inquire about the price. Most people will be staggered to learn that the average household in this country will be asked to stump up between £2,000 and £3,000 to pay for this. What plans do the Government have to tell people about the bill they are facing and to ask them whether they think it is a good use of their money?

The hon. Gentleman needs to look at both sides of the account, because we will not be paying ongoing vast sums into the EU as we are at the moment. He needs to look at the big picture.