Exiting the EU: the financial settlement inquiry
Closed
What the inquiry looked at
“When the UK leaves the European Union on 29 March 2019, the UK will pay a financial settlement to the EU. Negotiations surrounding the financial settlement are being led by HM Treasury. As part of the ongoing negotiations, the Prime Minister said the UK would honour financial commitments made to the EU during its Membership, and in December 2017 the UK and EU issued a joint report outlining agreed principles behind any financial settlement. These principles included that the UK contribute to EU annual budgets until December 2020, and that the UK continue to pay off some of its liabilities to the EU, such as pension liabilities. In January the Chancellor of the Exchequer estimated the cost of settlement as between £35 billion and £39 billion. In a new report, the National Audit Office found that although HM Treasury’s estimated settlement was reasonable, small changes to any of the assumptions they had made could increase it. They also found that the UK could have to pay up to £3 billion more in EU budget contributions than HM Treasury estimates, and that there are other liabilities relating to EU exit that are not reflected in the estimated settlement. The Committee will ask senior officials from HM Treasury whether the final settlement could vary from the current estimate, how the Treasury will keep Parliament informed about any changes, as well what is not included in the estimated settlement and why.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
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.
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 will not 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.
What the government said
No government response is linked to this report.
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 16 April 2018 to 27 June 2018.
- Oral evidence 23 Apr 2018
- Report 27 Jun 2018
What it recommended
The committee's recommendations are not listed here yet. Read them in 48th Report - Exiting the EU: The financial settlement ↗ on parliament.uk.
Evidence
Oral evidence sessions 1
- 23 Apr 2018No witnesses recordedparliament.uk ↗