Brexit bill jumps by £10bn – but Tories end cost announcements

It came as the Tories said they do not plan to publish any future consolidated estimates of the Brexit bill total, instead leaving the details in the small print of departmental budgets.

The chief secretary to the Treasury, Simon Clarke, accepted the figure had climbed above the UK Government’s previous estimates – despite protestations in the 2021 that the EU’s estimate was too high.

Last year, accountants in Brussels estimated that the UK would have to pay €47.5bn (£40.8bn) as part of the “divorce” settlement. However, the London government insisted it did “not recognise that figure”.

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But, as the Tory government has now admitted, the EU’s 2021 estimate of £40.8bn was in fact too low.

Clarke told Parliament in a written statement, published on the day Westminster goes to summer recess, that the divorce bill is now estimated to be £42.5bn.

This is around £10bn more than the Office for Budget Responsibility’s estimate of £32.9bn, made when the UK left the EU in January 2020.

In July 2021, the Treasury estimated a net transfer from the UK to the EU of £30.4bn.

However, the UK Government has insisted that the latest £42.5bn figure should be compared to estimates putting the bill in the region of £35-39bn.

Clarke (above) said in his statement: “The latest estimate of £42.5bn shows an increase against the original range of £35-39bn, which is primarily due to the most recent valuation of the UK’s obligation under Article 142 for EU pensions.

“The primary drivers are the latest discount rates and inflation assumptions, which are centrally set by the Government for valuing long-term liabilities. However, given this is a multi-decade liability, the variables used in this forecast will continue to fluctuate up and down.

“The agreed scope of the underlying liability remains unchanged, and the UK will continue to pay those liabilities as they come due, according to the actual value at the time.”

Regarding plans to no longer publish any further consolidated estimates of the cost of the Brexit divorce bill, Clarke said: “As all payments will be made from departmental accounts HM Treasury do not plan to replicate or consolidate financial reporting on the [Trade and Cooperation Agreement (TCA)] in future editions of the statement.

“Nor do we intend to report annually our revised estimate of liabilities expected under the TCA, because actual costs will, in future years, appear in the departmental resource accounts.”

Responding on Twitter, suspended Labour MP Neil Coyle wrote: “Country in a cost of living crisis and economy struggling – but Brexit just cost Brits an extra £10 billion. And it’s not even done yet.”

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“‘Oven-ready’? Nope. Half-baked? Not even,” he added.

The Brexit divorce bill is the name given to the payments which the UK Government agreed to make in order to secure a deal before leaving the EU.

As Westminster's European Scrutiny Committee noted in October 2021: "The financial settlement set out in the Withdrawal Agreement in particular translates into a significant net transfer from the UK to the EU. However, its total cost is not fixed. 

"It will only become clear over time, as payments fall due over the coming decades using a complex methodology established in the Withdrawal Agreement."