Spending Review could be next year because of Brexit

24 Apr 19

Philip Hammond has hinted if the Treasury goes ahead with a three-year Spending Review it might not happen in 2019, to a group of MPs.

The chancellor told the treasury select committee today that it would be “unwise” to make a three-year settlement before details of Britain’s exit from the EU were agreed.

When pressed on whether the six-month extension to Brexit discussion meant the Spending Review would be delayed until next year, Hammond did not answer the question. 

He told the committee: “We will keep an open mind about how the process should unfold as we go through the next few months.

“If we are going to do a full three-year Spending Review then we need to formally start the process before the summer recess, carry it on through summer and bring it to a conclusion around the time of the autumn Budget.”

Hammond committed to a three-year Spending Review by the time MPs break for the summer in the Spring Statement last month, although this was subject to a Brexit deal

Since then, the EU has granted Theresa May an extension to Brexit from March 29 to October 31 to give the UK extra time to solve its current political impasse. While talks between the government and Labour continue it is unlikely a deal will be drawn up, and agreed by the EU, imminently.  

Hammond also told the committee: “My own view at the moment is that if we have not clearly found the solution to the Brexit conundrum and we are on our way to delivering an outcome it probably would not be appropriate to go ahead with a three-year Spending Review.”

The chancellor stated that making a settlement without clarity on whether Britain will leave with a deal or not “would be an unwise thing to do”.

MPs also challenged Hammond on the funding gap facing local authorities, citing the Local Government Association’s analysis that estimates the funding gap will reach £8bn by 2025.

“We will  be – in the course of the Spending Review – setting forward budgets for local authorities,” he said.

Hammond added: “I do accept there is a funding gap but I don’t accept the numbers you just quoted from the LGA.”

The chancellor said that he did not have alternative figures that he was willing to share with the committee, when asked by the panel.

“Obviously we are looking at local authority funding, and it will be one of the key areas that we need to look at,” he added.

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