The £2.1bn for no-deal planning announced by the government this morning is at once a sum that is obscenely big, and hopelessly small. John McDonnell was right to label it “an appalling waste of taxpayers’ cash”.
Brexit: Labour attacks ‘appalling waste’ as Johnson adds £2.1bn to no-deal fund
It beggars belief that the government is spending billions – £6.3bn so far this year – on contingency planning in case it decides to take us into a self-imposed economic disaster that is entirely avoidable. On the other hand, if Boris Johnson is deluded enough to proceed with crashing Britain out of the EU without a deal – and many of his actions as prime minister suggest that he is – the couple of billion announced this morning will feel like small change compared to what the government and businesses will have to spend to mitigate the long-term economic pain of no deal.
In the fantasy world that Johnson and his merry band of ideologues inhabit, where the chances of no deal are a “million-to-one against”, this is £2.1bn well spent: the EU will look across the Channel and – no matter that chief secretary to the Treasury, Rishi Sunak, couldn’t even say on the radio this morning how many of the extra 5,000 staff HMRC say it needs in the event of no deal are in place – feel intimidated by the amazing preparations Britain has underway. It will realise our no-deal threats are entirely credible, and meekly scramble back to the negotiating table.
But, of course, the chances of no deal are immeasurably higher than one in a million as a result of the stalemate we find ourselves in. The EU has been consistently clear it won’t drop the backstop, designed to act as an insurance policy that maintains an open border in Ireland, which it already sees as a significant compromise on its part. There’s no reason to disbelieve it. Removing the backstop means it could find itself in a position where it has to allow tariff and quota free trade across the Irish border, without any requirement for Britain or Northern Ireland to follow the EU’s regulatory standards. In other words, it could compromise the very integrity of the single market.
‘The chief secretary to the Treasury, Rishi Sunak, couldn’t even say on the radio how many of the extra 5,000 staff HMRC say it needs in the event of no deal are in place.’ Photograph: Chris J Ratcliffe/Getty Images
Johnson has regardless made dropping the backstop a precondition of talking to the EU about a new deal. And incredibly, given the impact it will have on the British economy – the Office for Budget Responsibility (OBR) has forecast it would plunge Britain into recession, sending unemployment soaring above 5% and house prices collapsing by 10% – it appears that we have a prime minister who is prepared to crash us out of the EU. Despite the refrain of the 2016 leave campaign being about Britain taking back control and reclaiming sovereignty, it seems he might be prepared to ride roughshod over the views of parliament and the public in doing so.
Unless parliament can find a way to stop it, the chances of no deal are increasing by the day. Johnson could have eradicated the need for no-deal contingency spending by being clear he’d never commit to such a grossly negligent act of economic self harm. But he boxed himself in with his “do or die” rhetoric during the Tory leadership contest. And so money that could have been spent elsewhere – £6.3bn would boost the annual social care budget by almost a third – continues to be spent getting ready for something business leaders have warned Britain can never be ready for. That’s not taking into account the billions that the CBI says businesses have spent on their own contingency planning.
One thing that’s certain: if we do crash out with no deal, that £6.3bn will seem like peanuts. If borne out, those OBR forecasts will translate into hundreds of thousands more people losing their jobs; small businesses going bankrupt; people who already struggle to pay the mortgage finding themselves trapped in negative equity. And it’s going to be those areas of the country hardest hit by decades of deindustrialisation and the financial crisis that will feel the economic pain of no deal most sharply.
The Treasury won’t know what’s hit it. But Johnson’s early spending pledges – plus the 10-year track record of Tory chancellors – tell us all we need to know about what its response will be. We can expect tax cuts for the more affluent but nothing for those low-income families with children who have lost thousands of pounds’ worth of tax credits and benefits a year. Pre-election bungs for the police, schools and hospitals may provide some temporary relief for public services, but services for vulnerable children, young people and adults will continue to get eaten away.
It’s completely unprecedented for a government to be spending billions preparing for an entirely avoidable, self-imposed recession that there’s no evidence voters want. But if we end up crashing out, it will be just the start.
• Sonia Sodha is chief leader writer at the Observer, and deputy opinion editor at the Guardian
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- Corresponden & leading expert at Washington, D.C. news
- Former reporter at Miami Herald
- Studied at Stanford University
- Went to Finlay DR Carlos J Elementary School
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Is a national and foreign correspondent based in D.C. She files investigative reports and covers breaking news on a range of topics, including corruption, police shootings, etc. Before joining the TimWorld in 2018, she worked at the Miami Herald. She was a John S. Knight fellow at Stanford University.