COMMONS

MPs warn of extra cost of Brexit transition

22 February 2018

The European Scrutiny Committee has today asked the Government for urgent clarification about the financial implications for UK taxpayers of  the proposed transition period after the UK leaves the European Union in March 2019.

Uncertainty of length of the transitional period

Although the EU has proposed that the transition should end by 31 December 2020, the Government's new paper on transition does not commit to a transition that ends by that date, and the Prime Minister has previously said the transition could last well into 2021. The length of the transitional period can have significant consequences for the UK taxpayer: under the EU's terms for the transition, the UK will remain a contributor to the EU budget as if it were still a Member State, but it would have no vote over the EU budget or funding decisions.

Although the Government and the European Commission reached agreement on that principle in December 2017, that agreement only covers the period up until the end of 2020. If the transition lasts beyond December 2020, this could require the UK to make payments into the EU budget for 2021 as well. From 1 January 2021 onwards, the Government would then be paying into the EU's new long-term budget - the Multiannual Financial Framework - without a formal say over the size of its overall contribution to the EU. It would also tie the Government into new EU spending programmes, like the Common Agricultural Policy, without having had a vote on how those are designed or spend their budgets.

Longer transition period would mean increased UK contributions

The longer the transition, the more the UK would have to contribute to EU spending commitments which it cannot block or influence once it ceases to be a Member State. The Government has estimated that the financial contribution to the EU budget until the end of 2020 will cost between £35 and £39 billion. The additional costs of staying a contributor to the EU budget afterwards are impossible to quantify at present, but could run into billions of pounds if the transition lasts well into 2021.

The Committee has asked Elizabeth Truss, the Chief Secretary to the Treasury, to explain how the Government will ensure that the UK will not have to pay into the post-2021 EU budget without a right to vote on how the money is spent.

Further information

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