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Clarity on costs crucial to meaningful vote on Brexit

27 June 2018

The Public Accounts Committee report finds any 'EU dividend' will be hard to calculate and, if it materialises, is some years away

Cost of leaving remains uncertain

Overseeing the UK’s withdrawal from the European Union is one of the biggest challenges that has faced any government.

The cost to the UK of leaving remains uncertain because it depends on future events, such as the UK’s economic growth. There is a risk that the amount the UK actually pays will fall outside the narrow range estimated by the Treasury of £35 billion to £39 billion.

The Treasury’s estimate does not include at least £10 billion of costs to the government on leaving the European Union associated with the settlement deal, including nearly £3 billion of contributions towards the European Development Fund. It also does not include potentially significant costs associated with the UK’s future relationship with the EU. The taxpayer could continue to make payments for years to come.

Estimated value of the settlement may change

As new information becomes available the estimated value of the settlement may change. To have a meaningful Parliamentary vote on a withdrawal agreement later in 2018, Parliament and the taxpayer require an up-to-date estimate of the settlement’s costs, as well as better information on the wider potential costs of withdrawal.

Without this, MPs and the taxpayer won’t have complete information about the potential costs of the government’s deal with the EU.

There is much talk of an EU dividend but our work has highlighted a number of as yet uncertain costs. Any dividend will be hard to calculate and, if it materialises, is some years away.

Chair's comments

Comment from Committee Chair, Meg Hiller MP:

"The true cost of Brexit is a matter of outstanding public interest. Government must provide Parliament and the public with clear and unambiguous information.

Government’s narrow estimate of the so-called divorce bill does not meet this description. It omits at least £10 billion of anticipated costs associated with EU withdrawal and remains subject to many uncertainties.

The UK’s contribution to the EU’s outstanding commitments and liabilities after 2020 is unknown. The estimate also excludes costs that may arise from parts of the withdrawal agreement still to be negotiated.

We know UK payments to cover pension and benefit costs could run for decades. But there are other potentially significant ongoing costs likely to arise from post-Brexit restructuring—for example, new trade and customs arrangements, replacement institutions and the costs of participating in EU programmes as a non-member state.

Given these uncertainties, it is critical that Parliament and the taxpayer are kept informed as agreements are reached and new information becomes available. 

A Parliamentary vote on EU withdrawal will only be truly meaningful if this information is disclosed in a timely fashion.

Government must explain how it will approach this task and waste no time in getting on with it."

Further information

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