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

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.

To address the injustice of Period Poverty the Chancellor is expected to use Wednesday’s Spring Statement to make sanitary products free in schools. @jrf_uk urges him to take action now on the root causes of poverty, not just the symptoms: https://t.co/pU2JsDfCoipic.twitter.com/kdu3Xq5p4H

— Joseph Rowntree Fdn. (@jrf_uk) March 11, 2019

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.”