Chancellor Philip Hammond will set aside £60bn in preparation for a Brexit crisis during Wednesday’s Budget, but will not spend any extra cash to alleviate the meltdown in the NHS.
Signalling that the Tories’ austerity drive on public services will continue, Hammond said his priority is directing funds to help mitigate any economic repercussions of leaving the EU.
The government is set to take an aggressive stance during the negotiations and has vowed to leave the EU single market and customs union.
As well as refusing to guarantee the rights of European citizens living in the UK, Theresa May has also threatened to lower corporation tax to poach big business from the continent if a satisfactory trade deal with the EU is not reached.
Responding to the news of Hammond’s £60bn Brexit crisis fund, shadow Chancellor, John McDonnell, said the NHS “crisis is here now” and called for some of the £60bn to be spent solving it.
However, the Chancellor was adamant that all funds will be needed for Brexit and warned that the government would “fight back” and “not slink off into a corner” if a trade deal is not agreed with the EU.
Writing in the Sunday Times, Hammond said: “As we begin our negotiations with the European Union we are embarking on a new chapter in our history.
“We may face unexpected challenges in the months and years ahead.”
“We need to maintain our commitment to fiscal discipline and to strengthen our economic position as we forge our vision of Britain’s future in the world.”
Speaking on the BBC’s Andrew Marr show on Saturday, Hammond said that if the UK crashes out of the EU negotiations the government would do “whatever it takes” to reform the economy.
He said: “If there is anybody in the European Union who thinks that if we don’t do a deal with the European Union, if we don’t continue to work closely together, Britain will simply slink off as a wounded animal, that is not going to happen.
“British people have a great fighting spirit and we will fight back. We will forge new trade deals around the world. We will build our business globally.”
The Chancellor was clear that the government’s purse strings would remain closed, despite a recent rise in tax revenues, for nearly everything except Brexit.
He said: “If your bank increases your overdraft limit you don’t want to go and spend every penny in it.
“I regard my job as Chancellor as making sure that our economy is resilient, that we’ve got reserves in the tank so as we embark on the journey that we’ll be taking over the next couple of years we are confident that we’ve got enough gas in the tank to see us through that journey.”
Hammond dismissed providing extra funds for “under pressure” services, saying that the problems facing the NHS would not be solved by money alone.
He said: “There is a case for taking a longer term view to fund a service that is linked to the ageing demographic of the population.”
However, shadow Chancellor, John McDonnell, told the BBC that the crisis in the NHS and social care was too big to be ignored.
He said: “The independent estimate now on (spending needed for the) NHS and social care is between £8bn and £12bn.
“We believe that the Government now put aside, as is reported, £60bn – increased tax receipts have contributed to this as well – for a crisis in case of Brexit.
“The crisis is here now. We should prepare for Brexit but some of that money now needs to deal with the crisis in the NHS and social care.”