Boris Johnson and Michael Gove promised Brexit would release an extra £350m a week for the NHS. Now they’ve given the green light to Theresa May to double her offer to settle our obligations to the EU, to a rumoured £40bn. Meanwhile, tomorrow’s budget is likely to confirm that the health service is being starved of funds.
But that’s not the end of the story. When the final Brexit bill comes in, it is likely to reach about £80bn – double the prime minister’s latest offer.
Not that the government will come clean on this, as it is trying to head off a backlash by Tory backbenchers unhappy that even the £40bn agreed at yesterday’s Brexit cabinet subcommittee is too much. If they realised how much we are going to end up paying, they really would go “bananas” as one MP put it.
The government is hoping to defuse opposition from within its own ranks by suggesting the money will come with strings attached: it will be conditional on the EU agreeing a good trade deal or, more realistically, at least agreeing to talk about a future trade deal.
May’s new offer could be enough to break the deadlock in the talks at next month’s crucial summit – provided she doesn’t say it’s a “final offer” or add unrealistic conditions to it. After all, the other EU countries have said they will be prepared to move on to talking about our future relationship once “sufficient progress” has been made on the three key divorce issues: money, citizens’ rights and Ireland.
Our government’s failure to come up with any practical solutions to the Irish question may yet keep the talks frozen. But, looking at the money issue alone, the EU could well decide that a £40bn offer amounts to sufficient progress, without accepting that that is the end of the matter.
And that means the final bill is likely to rise. After all, the EU would come back to the money issue towards the end of the talks. Once we had sketched out the broad framework of our future relationship, and the transitional period to get there, it would push hard to get the extra £10-20bn it says we owe. Given that May would by then be desperate to clinch a deal, she would probably fold.
But even that wouldn’t be the final bill, because the prime minister hasn’t been realistic about something else: the two-year transitional period she is asking for won’t be enough to nail down the details of a future free trade deal.
All we will have by the time we quit the EU is a fairly flimsy document. Filling in the details, getting it ratified by all the other 27 countries and then implementing it could take up to five years, according to the Irish foreign minister.
Even Gove and Johnson admitted that two years may not be long enough, in the letter they wrote to the prime minister last month calling on her to back a hard Brexit. They wrote: “We may still have a ‘no deal’ outcome at the end of the transition period.”
The snag is that for each extra year of transition we will have to pay membership fees to the EU of about £8bn. So a realistic transitional period could cost us a further £20-30bn. Add it all together, and you get £80bn.
Of course, we could avoid paying this last sum by not extending the transition beyond two years. But then the economy would fall off a cliff in March 2021, just before the next election. That would be like rolling out the red carpet to Downing Street for Jeremy Corbyn. When push comes to shove, the Tories would probably blink.
It would, though, be much better if May fessed up to this all now so that the public could have an honest debate. If voters were told how much Brexit is really going to cost – and how much the loss of access to the EU’s vast single market is going to clobber the public finances, so we will struggle even harder to get cash for the NHS, schools, homes and vital infrastructure – they might decide they don’t want Brexit at all.
• Hugo Dixon is chairman and editor-in-chief of InFacts
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But that’s not the end of the story. When the final Brexit bill comes in, it is likely to reach about £80bn – double the prime minister’s latest offer.
Not that the government will come clean on this, as it is trying to head off a backlash by Tory backbenchers unhappy that even the £40bn agreed at yesterday’s Brexit cabinet subcommittee is too much. If they realised how much we are going to end up paying, they really would go “bananas” as one MP put it.
The government is hoping to defuse opposition from within its own ranks by suggesting the money will come with strings attached: it will be conditional on the EU agreeing a good trade deal or, more realistically, at least agreeing to talk about a future trade deal.
May’s new offer could be enough to break the deadlock in the talks at next month’s crucial summit – provided she doesn’t say it’s a “final offer” or add unrealistic conditions to it. After all, the other EU countries have said they will be prepared to move on to talking about our future relationship once “sufficient progress” has been made on the three key divorce issues: money, citizens’ rights and Ireland.
Our government’s failure to come up with any practical solutions to the Irish question may yet keep the talks frozen. But, looking at the money issue alone, the EU could well decide that a £40bn offer amounts to sufficient progress, without accepting that that is the end of the matter.
And that means the final bill is likely to rise. After all, the EU would come back to the money issue towards the end of the talks. Once we had sketched out the broad framework of our future relationship, and the transitional period to get there, it would push hard to get the extra £10-20bn it says we owe. Given that May would by then be desperate to clinch a deal, she would probably fold.
But even that wouldn’t be the final bill, because the prime minister hasn’t been realistic about something else: the two-year transitional period she is asking for won’t be enough to nail down the details of a future free trade deal.
All we will have by the time we quit the EU is a fairly flimsy document. Filling in the details, getting it ratified by all the other 27 countries and then implementing it could take up to five years, according to the Irish foreign minister.
Even Gove and Johnson admitted that two years may not be long enough, in the letter they wrote to the prime minister last month calling on her to back a hard Brexit. They wrote: “We may still have a ‘no deal’ outcome at the end of the transition period.”
The snag is that for each extra year of transition we will have to pay membership fees to the EU of about £8bn. So a realistic transitional period could cost us a further £20-30bn. Add it all together, and you get £80bn.
Of course, we could avoid paying this last sum by not extending the transition beyond two years. But then the economy would fall off a cliff in March 2021, just before the next election. That would be like rolling out the red carpet to Downing Street for Jeremy Corbyn. When push comes to shove, the Tories would probably blink.
It would, though, be much better if May fessed up to this all now so that the public could have an honest debate. If voters were told how much Brexit is really going to cost – and how much the loss of access to the EU’s vast single market is going to clobber the public finances, so we will struggle even harder to get cash for the NHS, schools, homes and vital infrastructure – they might decide they don’t want Brexit at all.
• Hugo Dixon is chairman and editor-in-chief of InFacts
Betty MacDonald fan club founder Wolfgang Hampel sings 'Try to remember' especially for Betty MacDonald fan club organizer Linde Lund at Vita Magica September
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