EU exit bill estimate could be too low, NAO suggests

20 Apr 18

The Treasury’s estimate of the cost of the UK’s ‘divorce’ from the European Union is reasonable but liable to prove too low, the National Audit Office has said.

Its report, Exiting the EU: the financial settlement, noted the £35-39bn estimate for the UK’s remaining liabilities for actions agreed while it was an EU member would not be enforceable until the UK and EU agreed the final withdrawal agreement.

Auditors said the estimate was “intended to provide some monetary understanding of what had been agreed in the joint report” from the UK government and European Commission.

This was based on published data and assumptions around other costs.

“Given these parameters, we found the estimate to be reasonable,” the NAO said, but added there were some “qualifications” that needed to be understood.

Significant elements of the settlement’s cost were still to be determined, including the value of the EU’s future liabilities and commitments, and what share the UK would pay.

“Relatively small changes in events could push the cost of the settlement outside HM Treasury’s published range,” the watchdog said.

NAO head Amyas Morse said: “We have reviewed the Treasury’s estimate of how much the UK will pay the EU under the draft withdrawal agreement.

“The estimate reflects a number of moving parts, so the range of costs in it could have been wider than £35bn to £39bn. But overall we think it is a reasonable estimate.”

The Treasury told auditors it expected to pay off the UK’s share of outstanding commitments over the 2020-26 period but some liabilities could extend much longer, in the case of pensions to at least 2064.

It also “strongly represented to us…that it would be damaging to the national interest to publish the legal advice [on the settlement] in any detail and we accept that this is so at present,” the NAO said.

A government spokesperson said: “We have always been clear that we will honour commitments made while being part of the EU, and we have negotiated a settlement that is fair to UK taxpayers and means we will not pay for any additional EU spending beyond what we signed up to as a member.

“The NAO has confirmed that our estimated figure is a reasonable calculation and we are now discussing our future relationship.”

The government said it had always been clear the figure was an estimate contingent on future events but the UK could not be required to pay for additional spending beyond what it signed up to as an EU member.

Labour’s Meg Hillier, chair of the Public Accounts Committee, said: “The government’s divorce bill estimate of between £35-£39bn is exactly that, an estimate.

“Whereas the promises made by some Brexiteers of the bounty that our public services would receive post-Brexit are likely to be downgraded, I fear the cost of the UK leaving the EU could increase further.”

Hillier said the government must be clear with taxpayers what they were paying for and why as “the real costs of the divorce bill come to light”.

 

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