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No-deal Brexit would scupper new PM's spending plans – Hammond

No-deal Brexit would scupper new PM's spending plans – Hammond

Chancellor to warn leadership candidates they can leave with no deal or spend, but not both.

The incoming prime minister will be forced to abandon any spending plans if the UK accelerates towards a no-deal Brexit, Philip Hammond is to say in a warning apparently directed at Boris Johnson.

The chancellor, who is likely to be removed from the cabinet under a Johnson premiership, will tell business leaders in his Mansion House speech on Thursday that any leadership candidate must have a plan B if renegotiations with the EU fail, or their “job will be on the line”.

He will say the two “core, unshakeable, beliefs” of the Conservative party are under threat – meaning belief in prudent management of public finances and in the four nations of the UK.

Hammond’s intervention is understood to have been prompted by a shock YouGov poll of Conservative party members, which found 63% of members would be willing to see Scotland leave the UK and 59% would be prepared to lose Northern Ireland in order to secure Brexit. More than 60% were prepared to see “significant damage to the UK economy”.

“I will not concede the very ground we stand on,” Hammond will say. “I will fight, and fight again, to remake the case for pragmatism and, yes, for compromise in our politics – to ensure an outcome that protects the union and the prosperity of the United Kingdom.”

Hammond, who is currently locked in a battle with Theresa May over spending commitments the prime minister wishes to make as part of her legacy, suggested he had been alarmed at candidates splashing the cash in their campaign promises.

Johnson’s plan to raise the 40% tax threshold from £50,000 to £80,000 is said to cost £14.1bn. Michael Gove’s promise to scrap VAT and replace it with a lower sales tax has been estimated at £20bn. Sajid Javid has said he would back slowing the pace of debt reduction to use up to £25bn a year for spending, including on education.

“There is a choice. Either we leave with no deal … or we preserve our future fiscal space. We cannot do both,” Hammond is expected to say.

He will also warn that any candidate planning to use no deal as their plan B will be risking a general election. It will be “an immutable truth” that parliament has rejected the current deal, as well as no deal, and that the EU will not countenance renegotiation, he will say.

Hammond is to say: “The question to the candidates is not ‘what is your plan?’ but ‘what is your plan B? If your plan A is undeliverable not having a plan B is like not having a plan at all. So, the candidates need to be honest with the public.

“We cannot allow ourselves to be forced to choose between our democracy and our prosperity. If the new prime minister cannot end the deadlock in parliament, then he will have to explore other democratic mechanisms to break the impasse. Because if he fails, his job will be on the line – and so, too, will the jobs and prosperity of millions of our fellow citizens.”

Source: www.theguardian.com

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