Theresa May's £39bn Brexit divorce bill to be investigated by auditors to establish if it is 'reasonable'

'Parliament must be able to scrutinise the reasonableness of this bill', says Treasury committee chairwoman Nicky Morgan

Rob Merrick
Deputy Political Editor
Wednesday 10 January 2018 11:14
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What is Article 50?

Auditors will investigate the £39bn “divorce billTheresa May has agreed to pay as part of a Brexit deal, to assess if it is “reasonable”.

The National Audit Office (NAO) will pore over the “assumptions and methodologies used” to calculate the payment, to settle the UK’s liabilities before EU withdrawal.

The move will see the details of the bill – which the Prime Minister has sought to obscure, to curb controversy – being set out in exhaustive detail.

Ministers have already clashed with the EU after Brussels insisted the money will be paid, even if talks to strike a post-Brexit trade agreement fail.

Polls have revealed voter resentment that the payment is planned – despite Boris Johnson, and other ministers, insisting earlier that the Britain would not pay up.

The NAO was asked to step in by Nicky Morgan, the former Conservative Cabinet minister who now chairs the influential Commons Treasury select committee.

“Various wide-ranging sums for the UK’s withdrawal payment to the EU have been bandied about,” Ms Morgan said.

“Last month, the Prime Minister told Parliament that the so-called Brexit divorce bill will be £35-£39bn.

“Parliament must be able to scrutinise the reasonableness of this bill. Accordingly, I have written to Sir Amyas [Morse, the auditor general] to request that the NAO examines the withdrawal payment, including the assumptions and methodologies used.”

Later, Sir Amyas confirmed that the NAO “intends to report on the main elements of the financial settlement with the EU”. The report is expected to be published in late March.

The auditor general has already suggested it will be perfectly possible for the NAO to examine the details of the proposed payment, saying the watchdog is “quite familiar” with such an approach.

Speaking to the Treasury committee last year, he said: “If there is what is described as a divorce bill, how is that arrived at?

“We would be examining, from the point of view of reporting to Parliament, whether these sums all appear to be within a reasonable range, looking at the circumstances and the legal position.”

The Cabinet agreed to make the financial settlement, after the EU insisted agreement was a red line to unlock “phase two” talks on a transitional Brexit deal and a future trading arrangement.

Last month, the Prime Minister agreed to pay around £39bn, a sum designed to settle Britain’s financial obligations from 40 years of EU membership.

The expected sum doubled the amount Mrs May had offered two months earlier, when she had simply pledged to plug the gap in the EU’s budget through to 2020.

The exact amount will not be known for many years, because it depends on future pensions and development projects, but the Prime Minister said it “would be £35bn to £39bn”.

To calm Tory backbench anger, Liz Truss, the Treasury Chief Secretary, vowed that payments would be “contingent on getting a suitable outcome” from the trade negotiations.

But this was later dismissed by her boss, Philip Hammond. The Chancellor told MPs it was “inconceivable that we would walk away from obligations”, regardless of the success or failure of the trade talks.

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