True cost of Brexit divorce bill could rise by £7billion as Tory MPs accuse EU of 'ripping off' Britain

Steven Swinford
Philip Hammond, the Chancellor - AFP

The true cost of the Brexit divorce bill could be more than £7bn higher than the £39bn estimated by the government, the official financial watchdog has suggested.

The National Audit Office said that "relatively small changes" to Treasury forecasts could lead to a significantly higher exit bill.

It warned that the European Union could "skew" future decisions to increase the size of the Brexit divorce bill.

Priti Patel, a eurosceptic Tory MP and former Cabinet minister, said: "Ministers must make sure the EU cannot force the financial settlement to be higher and should be working to lower it as much as possible. We’ve already paid hundreds of billions of pounds into the EU and the British taxpayer has had enough of the EU ripping us off."

The NAO said that Britain could have to pay an extra £3billion in contributions to the EU's Budget to offset earlier payments being lower after it leaves the EU.

Priti Patel, a eurosceptic Tory MP

The UK will also pay £2.9 billion to the UK European Development Fund for overseas aid which is not featured in the exit settlement estimate because the fund was not established under EU treaties.

Changes in the exchange rate could add another £1.1billion to the bill, while Britain will also have to provide a guarantee worth £30billion to the European Investment Bank.

However the report said the Treasury and the EU consider the chances of Britain having to pay out on the guarantee to be "remote".

Britain's contribution to the EU pension scheme may last until 2064 unless the Government decides to pay off its commitments earlier in a lump sum which would present "risks and opportunities to the total value the UK may be liable to pay".

The NAO states: "The terms of the settlement, which mark 31 December 2020 as a key date for determining the UK's share of liabilities, mean the EU Commission could skew future decisions and impact the total value the UK will have to pay back."

Brexit | What is the Brexit “divorce bill”?

The watchdog called on the Government to consider "how it will update Parliament with revised estimates as new information becomes available".

Sir Amyas Morse, the head of the National Audit Office, said: "The estimate reflects a number of moving parts, so the range of costs in it could have been wider than £35 billion to £39 billion. But overall we think it is a reasonable estimate. "As the vote on the draft withdrawal agreement approaches we expect that Government will provide a substantial amount of material for Parliament to consider. "

A Government spokesman said: "We have always been clear that we will honour commitments made while being part of the EU, and we have negotiated a settlement that is fair to UK taxpayers and means we will not pay for any additional EU spending beyond what we signed up to as a member. "The NAO has confirmed that our estimated figure is a reasonable calculation and we are now discussing our future relationship."

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