Mon, 15 July 2024

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Philip Hammond hits out at Boris Johnson and Jeremy Hunt over no-deal Brexit spending pledges

2 min read

Philip Hammond has hit out at Boris Johnson and Jeremy Hunt's big-money spending pledges and warned there will be no money to pay for them if there is a no-deal Brexit.

The Chancellor said the "fiscal firepower" he has set aside to spend on public services will only be available if the UK leaves the EU with a deal on 31 October.

Both Mr Johnson and Mr Hunt have unveiled a series of expensive spending commitments during the Tory leadership race.

They have included a vow by the former Foreign Secretary to cut taxes for higher earners, while his successor in the job has promised to spend £20bn to soften the economic impact of no-deal.

But in an explosive intervention, Mr Hammond tweeted: "The 'fiscal firepower' we have built up in case of a No-Deal Brexit will only be available for extra spending if we leave with an orderly transition.

"If not, it will all be needed to plug the hole a No Deal Brexit will make in the public finances."

Mr Hammond was promptly slapped down by a spokesperson for Theresa May, who when asked of his claims said: “The comments are clearly made in the context of the Conservative leadership contest.

“Unlike the Chancellor, I have not been commenting on the leadership contest.”

Mr Johnson confirmed at the weekend that he planned to use some of the £25bn of fiscal "headroom" set aside by the Treasury in the event of a deal being struck with Brussels.

The Uxbridge MP has promised to increase the income tax higher rate threshold (HRT) from £50,000 to £80,000 and to raise the point at which people start paying National Insurance contributions (NICs).

The Institute for Fiscal Studies (IFS) said the change to the tax rate would cost around £9bn.

He has also has committed to a £4.6bn-a-year rise in education spending by 2022/23, a 20,000 increase in police officer numbers, and to invest in Britain's broadband network.

Mr Hunt has vowed to slash corporation tax to 12.5%, which the IFS said would cost £13bn and to boost defence spending by £15bn.

He has also vowed to increase the point at which workers pay National Insurance contributions (NICs) and to reduce the interest rate applied to student debt.

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