TORY chancellor Philip Hammond promised in his Spring Statement to MPs yesterday in Parliament to spend a £26.6bn Brexit war chest to boost the economy, if MPs vote to leave the European Union with a deal.
He pledged to ‘free up more money’ both to cut taxes and to spend on public services what he called a ‘deal dividend’.
However, he added, such spending plans were based on achieving ‘a smooth Brexit’.
He then warned by contrast that a ‘disorderly’ Brexit would deal a ‘significant blow to economic activity in the short term’.
Tuesday’s decision by MPs to reject Theresa May’s Brexit deal for a second time had now left a ‘a cloud of uncertainty hanging over our economy’, he continued.
In fact, the British economy had ‘defied expectations’ as wages were expected to keep growing at rates of above 3% over the next five years, he claimed.
In conclusion, he said he ‘now expects the UK economy to expand’.
The statement had left the forecast for GDP growth in 2020 at 1.4%, he said, and now he expects the UK economy to expand by 1.6% a year in the following three years.
So even though the government is expected to borrow £22.8 billion this financial year, he claimed, he would be able to plug the gap between the money it spends on public services and the tax revenues it collects.
Labour’s Shadow chancellor John McDonnell swiftly responded: ‘The nation’s debt was standing at one trillion pounds – they’ve added three-quarters of a trillion to the debt since then.’
In fact ‘downgrading forecasts’ had become ‘a pattern’ under Hammond, he warned, severely criticising Tory government borrowing.
‘On the deficit,’ he continued, ‘he’s boasting about the deficit – but he hasn’t eliminated the deficit as we were promised by 2015.
‘He’s simply shifted it on to the shoulders of headteachers, NHS managers, local councillors and police commissioners and, worst of all, onto the backs of many of the poorest in our society.
‘The consequences are stark – infant mortality has increased, life-expectancy has reduced, and our communities are less safe.
‘The number of children in care has increased every year for the last nine years. He’s sending a message to the poorest and most vulnerable in our society that we do not care.
‘The number of pensioners living in serious poverty has reached one million. He’s inflicting poverty on our pensioners.
‘They are living for fewer years in Kensington, Liverpool – and on average eighteen years less than they are if they live in Kensington in London.’
McDonnell also questioned Hammond’s pledges of additional funding for the police, pointing out that police budgets have in fact been cut by £2.7bn since 2010.
That was almost £3bn lower than the £25.5bn predicted by the OBR in the October Budget, he stressed.