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Sunday Roundup – Philip Hammond – A ‘no deal’ Brexit would mean a new budget

28 October 2018

6:06 PM

28 October 2018

6:06 PM

With the Budget due on Monday, today’s highlights have come chiefly from the leading Treasury figures of the two major parties. Sophy Ridge was joined this morning by the Chancellor of the Exchequer. Hammond, who is known to be wary about the UK’s impending departure from the EU’s economic framework, told Ridge that tomorrow’s Budget would not be the last we’d hear from him if the Brexit negotiations break down:

PH: If we were to leave the European Union without any deal – I think that’s an extremely unlikely situation, but of course we have to prepare – then we would need to take a different approach to the future of Britain’s economy. We would need to look at a different strategy, and frankly we would need to have a new Budget that set out a different strategy for the future.

When Ridge asked if a ‘no deal’ Brexit would still mean an end to austerity as recently proclaimed by the Prime Minister, Hammond cautiously replied ‘We would have to wait and see what the situation was’. Hammond later expanded on this announcement when interviewed by Andrew Marr:

PH: One of the things that I have done is maintain fiscal buffers, a reserve of borrowing powers against my fiscal rules, so that if the economy – as a result of a ‘no deal’ Brexit, or indeed because of something else that we haven’t anticipated – needs support over the coming months and years, I have the capacity to provide that support.

On dealing with road repairs, Hammond pledged an extra £420 million to deal with the problem of potholes and other key repairs to local infrastructure. He told Ridge that tomorrow he would also be making an announcement about the ‘hypothecation of vehicle excise duty’, meaning that this tax is expected to be linked exclusively to spending on roads rather than a source of general revenue. On the future of the country’s high streets, Hammond said that ‘We’ve got to help the high street to evolve, [but] it’s important that we recognise that the high street will have to change’.

John McDonnell – No deal is ‘too much risk’

Ridge went on to talk to the Shadow Chancellor John McDonnell for his response to the Chancellor’s interview. Unsurprisingly, McDonnell was not impressed. He castigated Hammond for countenancing the possibility of a no deal and reiterated Labour’s calls for a fresh election:


JM: [Hammond] seemed to complacently accept that there’s a likelihood of no-deal. We can’t accept that. We’ve got to ensure that there is a deal and the best way of doing that is Theresa May negotiating a proper deal that protects jobs and the economy. And if she can’t do that, she should step to one side because there is too much at risk from a ‘no deal’ and if she can’t do it herself, let Labour get on with the negotiations or let’s have that general election and let the people decide.

McDonnell defended Labour’s much scrutinised ‘six tests’ for a good Brexit deal, telling Ridge ‘our tests are based upon what the government promised us’. He added that if the government ‘[brought] back a deal that will protect jobs and the economy – of course we’ll support it’. He decried Hammond’s offer of an extra £20 billion for the National Health Service as a ‘standstill budget’ and mocked the idea that austerity was ‘over’. He continued his line of attack on Universal Credit, proclaiming ‘I’m saying to other political parties that if he doesn’t halt the rollout of universal credit we’ve got to vote this Budget down’.

McDonnell – Labour’s nationalisation plan ‘not rocket science’

McDonnell also outlined in more detail his vision for an economy with major industries bought back into the public sector. Marr challenged him over the cost of his proposals to renationalise, among other things, Royal Mail, British Gas, the water companies and the National Grid:

JM: Whenever we purchase something, it comes onto our books. It’s neutral. That becomes an asset that we own. Then, instead of the profits going to shareholder’s pockets, we will use those profits to invest, reduce bills, and if we have to borrow at all, issue bonds for shares that will cover the cost of those.

AM: You’re going to have to borrow to do this.

JM: That borrowing is covered by the profits from those individual companies, and those profits will cover the borrowing, but also help us reduce costs and allow us to invest as well. This is not rocket science. This is literally traditional business methods.

McDonnell would not be drawn on the figures, continuing to insist that ‘Parliament would set the price’ of renationalising each company. On Labour’s fiscal plans, McDonnell told Marr that ‘We are halting austerity. We are reversing austerity as well,’ a process he said he believed was possible over ‘the lifetime of a parliament’. McDonnell responded with scorn about ‘fantasies about us being Singapore off the coast of Europe’ in the event of no deal Brexit, in a rebuff to an earlier suggestion by Hammond.

Justine Greening – ‘Treasury does not value investment in people properly’

The former Education Secretary Justine Greening has expanded on a point of criticism she made last month, explaining to Sophy Ridge why she did not feel that the Treasury did not always make the most cost-effective decisions long term:

JG: It sounds like we’ll hear more roads investment tomorrow and of course that’s welcome, but in the end what’s going to determine Britain’s success – whatever happens on Brexit – is going to be people… The Treasury does not value investment in people properly and because of that I don’t think we get the right decisions out of that department and it now needs to fundamentally reform to make sure that in a knowledge based economy… we actually get sensible decisions taken by the Treasury and sensible investment in people.

Greening was non-committal about how she would vote on the Universal Credit reforms, saying ‘it’s going to be hard for many of us who are concerned’, but disregarded John McDonnell’s approach as ‘No strategy, just more spending’. She also stated that Monday would see ‘the most important budget in a decade’. She stopped short of endorsing Theresa May’s leadership of the Conservative party, but added ‘the Conservative party is nothing if it is not the party of opportunity. Monday is a chance for us to set out what we really mean by that’.

Jacob Rees-Mogg – The Treasury ‘has egg on its face’

And finally, Jacob Rees-Mogg put in an appearance on Ridge’s show to play down the Chancellor’s warnings about the effects of a no-deal Brexit. He compared the situation to the previous time a Chancellor warned about a Brexit-related emergency budget:

JRM: The Treasury has been the bastion of Remoanerism since the referendum and indeed before. It came out with all these lunatic forecasts before the referendum as to what would happen purely on a vote to Leave. Bear in mind the Treasury said there would be 800,000 job losses potentially, just on voting to Leave, before anything had happened. So the Treasury has rather embarrassed itself, has a lot of egg on its face from getting its Brexit-related forecasts so wrong so far and I think there is an element within the Treasury that is still grumpy about Brexit and that’s a pity.


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