News

Chancellor will unlock £20bn Brexit buffer if MPs back May's deal

In Wednesday's Spring budget statement Hammond is expected to offer a £20bn package to end austerity – but only if MPs support May's Brexit deal in tomorrow's meaningful vote

The Chancellor is expected to try to bargain with MPs in the Spring Budget Statement announcement on Wednesday, by offering £20bn to end austerity if parliament backs Theresa May’s Brexit deal.

Philip Hammond will release financial details for the months ahead the day after MPs vote on May’s deal (though some doubt the vote will go ahead as scheduled) and just hours before they vote on leaving the EU without any deal at all.

He will reportedly say a £15bn ‘hard Brexit’ rescue fund combined with greater tax takings could be put towards public services like policing and schools as well as tax cuts – but only if May’s deal is voted through in parliament.

Crashing out of the EU without a deal would bring about “inevitable disruption” to the economy, Hammond said, which is why a pot of money was being kept on reserve.

But he warned that public services would receive less funding if MPs did not vote for a deal in parliament.

“If that money is spent on dealing with the disruption of a no deal exit, it can’t be spent on policing on social care, on schools, on higher education, on defence, all the other things that people want to see money being directed to,” he said.

“If we vote for a deal … there will be more money available for public services when we come to the spending review later on this year.”

Hammond said in the Autumn Budget last year that the era of austerity was coming to an end.

Paul Johnson, of the Institute for Fiscal Studies (IFS), told the BBC at the time: “Arguably he’s just about got to the absolute minimal definition of ending austerity but it’s certainly nothing like a bonanza for the rest of the public services.”

And last month the IFS said the government had not saved enough through cuts to services and would in fact need to spend more to end austerity. The IFS report showed that the Chancellor would need to come up with £11bn more if cuts could be expectedly to slow.

Since Hammond pledged to invest in the NHS, defence and international aid last October, councils in particular have felt the weight of austerity – resulting in a knock-on effect which has impacted local services and communities, many of which are now starved for cash.

Around 80 per cent of local authorities said that current council funding was unsustainably low.

A decrease in funding from central government means everything from addiction services to libraries to music tuition in schools have suffered.

Free sanitary products for schools are also expected to be announced in Wednesday’s announcement, but experts say the gesture will do little to address the conditions which create period poverty in the first place.

Claire Ainsley, executive director for the Joseph Rowntree Foundation, said Hammond is right to recognise that people being forced to go without such essentials is “morally unacceptable” and that the move will “help correct an injustice which causes distress for many”.

However she added: “It’s also vital that action is taken now ​on the root causes of poverty.

“​​On Wednesday the Chancellor must show the government is serious about tackling the root causes of poverty, and take the opportunity to end the benefits freeze, which is keeping many UK families locked in poverty. Social security should be providing an anchor for people in difficult times but almost all families with children are affected by the freeze on benefits and tax credits.

“If continued, the freeze would leave hard-pressed families £560 a year worse off – the equivalent of three months food shopping for a low-income family.

“Wednesday is the Chancellor’s opportunity to show that despite the political context the government is serious about tackling burning injustices in the UK – we would urge him to take it.”

Support the Big Issue

For over 30 years, the Big Issue has been committed to ending poverty in the UK. In 2024, our work is needed more than ever. Find out how you can support the Big Issue today.
Vendor martin Hawes

Recommended for you

View all
Calls to nationalise Thames Water as Brits face 40% increase in bills: 'A con and a disgrace'
Water bills

Calls to nationalise Thames Water as Brits face 40% increase in bills: 'A con and a disgrace'

Will free school meals and vouchers be offered over the Easter holidays?
Free school meals/ Easter holidays
Free school meals

Will free school meals and vouchers be offered over the Easter holidays?

Leaked letter to Tory MPs reveals renting reforms will be 'watered down' to 'appease landlords'
Renters Reform Bill
RENTING

Leaked letter to Tory MPs reveals renting reforms will be 'watered down' to 'appease landlords'

Council tax is going up for millions in April. Here's what to do if you're struggling to pay
council tax/ houses
Cost of living crisis

Council tax is going up for millions in April. Here's what to do if you're struggling to pay

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Here's when UK households to start receiving last cost of living payments
next dwp cost of living payment 2023
3.

Here's when UK households to start receiving last cost of living payments

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know
4.

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know