Treasury warns ministers their departments face spending cuts in event of no-deal Brexit

Posted On: 
6th September 2018

Whitehall departments face having to make swingeing cuts to their budgets in the event of a no-deal Brexit, the Treasury has warned.

A no-deal Brexit could see Whitehall departments forced to slash budgets.
PA Images

A leaked document has revealed that a contingency planning unit set up to make preparations for Britain leaving the EU without a deal - dubbed Operation Yellowhammer - wants ministers to focus on "internal prioritisation" if the economy takes a hit.

The document was accidentally revealed by Treasury minister John Glen in Downing Street earlier today.

It says: "Departments should be raising Yellowhammer costs through the normal channels - through their spending teams for in-year pressures, and in their bids for 19/20 Brexit allocations for spending that year.

"Their first call should be internal prioritisation."

Chancellor Philip Hammond has made £1.5bn available to help Whitehall departments make preparations for a no-deal Brexit.

But speaking in Glasgow today, he conceded that were the UK to crash out without a deal, ministers would have to find extra funding from within their existing budgets to cope with with any additional funding pressures.

He told the BBC: "Departments have the funding for no-deal planning. What we're beginning to discuss is now part of long term contingency planning."

A Number 10 spokesman said: "It's standard procedure that the Treasury asks departments to consider internal re-prioritisation when they bid for funding. But there is no question of snyone being asked to re-prioritise funding from other projects.

"There is £1.5bn across all departments and they can bid for that."
Mr Hammond added: "In no deal circumstances we would have to refocus government priorities so that government was concentrated on the circumstances that we found ourselves in. Let me reiterate again that is not the outcome we are expecting and it's not the outcome we're seeking."

Labour MP Ben Bradshaw, of the anti-Brexit People’s Vote campaign, said: "With the Operation Yellowhammer revelation, we now know the Government is preparing for Brexit in the same way they’d approach catastrophes like flooding, a disease outbreak or a terrorist attack. This is not what anyone voted for in 2016.  

"We were promised ‘sunlit uplands’, but what’s being delivered instead is a public policy disaster with severe implications for the future of our country. Medicines and food are being stockpiled, the value of the pound is taking a battering and companies and jobs are leaving.

"We know from this leak that it will be already-stretched budgets in vital areas like health, education and defence that will be forced to bear the cost of this Government’s total failure to deal with the mess of Brexit."