Philip Hammond has angrily denied that he and the Treasury are “the enemy of Brexit”, while pouring scorn on claims that a £20bn boost for the NHS will be funded by a “Brexit dividend”.
In his Mansion House speech in the City of London, the chancellor said the proposed NHS cash injection would only be “partly funded” by reduced contributions to Brussels and that taxes would have to go up.
And in remarks that will further anger pro-Brexit Cabinet rivals, Mr Hammond vowed that the Treasury would be a “champion of prosperity” after Britain leaves Europe by protecting trade, maintaining open markets and co-operating on regulation.
Mr Hammond’s defence of his Brexit strategy will be seen as a direct counter-attack against Boris Johnson, who claimed in a leaked speech two weeks ago that the Treasury was “basically the heart of Remain”.
Image: Boris Johnson said the Treasury was ‘basically the heart of Remain’
But the chancellor told his City of London audience: “Of course, the immediate key to maintaining Britain’s leadership in innovation and strengthening London’s position as the world’s leading international financial services centre is ensuring we get a good Brexit deal and that we protect markets from uncertainty during the transition.
“Our clear long-term goal is to secure an enduring partnership that reflects the four and a half decades that the UK has been a member of the EU.
“That recognises that our European neighbours are our most important trading partners and that Dover to Calais is the busiest trading corridor in Europe, that our peoples are connected by centuries of shared history and culture.
“And that the security of our entire continent depends on our shared commitment to defending it – through our collaboration every day on intelligence, counter-terrorism, and defence.
“So as we leave the EU we need to forge a new relationship with our European neighbours that protects those patterns of trade, those business relationships that have been painstakingly built over decades, that maintains low friction borders and open markets.
“That does not make the Treasury, on my watch, “the enemy of Brexit”, rather, it makes it the champion of prosperity for the British people outside the EU, but working and trading closely with it.
“And part of that successful future partnership must be a mechanism that enables UK EU financial services trade to continue, delivering the benefits of open markets and deep regulatory co-operation.”
Mr Hammond added: “The UK will continue after Brexit to lead and influence international thinking on the regulation of financial services – and we will do so as the hosts of a global financial centre.
“But we will all be stronger and have more influence in shaping the global debate, if we and our EU neighbours remain closely connected.
It is Mr Hammond’s reference to “open markets and deep regulatory co-operation” that will most antagonise Brexiteers like Mr Johnson, Michael Gove and Jacob Rees-Mogg, who will claim he is attempting to keep the UK in a customs union with access to the EU’s single market.
In his leaked speech on 6 June , Mr Johnson warned of keeping the UK “locked in orbit around the EU, in the customs union and to a large extent still in the single market, so not really having full freedom on our trade policy, our tariff schedules, and not having freedom with our regulatory framework either”.
And the foreign secretary claimed that outcome was being pushed particularly by the Treasury and would mean the UK had left the European Union without taking back control over its own affairs.
Image: There will be tax rises to pay for extra NHS funding, the chancellor said
On the extra cash for the NHS, Mr Hammond conspicuously failed to use the phrase “Brexit dividend” used by Theresa May and confirmed the extra NHS cash would not be funded by more government borrowing but by tax rises likely to hit the better off.
“This week, the PM announced a five-year NHS funding package that will boost spending on health by over £20bn a year in real terms in England alone, partly funded by lower contributions due to Brussels,” said the chancellor.
“Making the NHS our number one priority in the forthcoming spending review. But, she also confirmed we will stick to our fiscal rules and will continue to reduce debt.
“So, as the prime minister said, taxpayers will have to contribute a bit more, in a fair and balanced way, to support the NHS we all use, while delivering on our fiscal commitments.”
Yet in a TV interview on Sunday, Mrs May said, referring to Vote Leave’s controversial red bus: “Some people may remember seeing a figure on the side of a bus a while back of £350m a week in cash.
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“Well, I can tell you what I am announcing will mean that in 2023-24, there will be about £600m a week in cash, more in cash, going into the NHS.”
She added: “Now, of course we’ve got to fund that, that money. That will be through the Brexit dividend, the fact that we’re no longer sending vast amounts of money every year to the EU once we leave the EU. And we as a country will be contributing a bit more.”