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Analysis

Johnson and Hunt’s magic money tree won’t survive Brexit axe

by Luke Lythgoe | 01.07.2019

The Tory party’s magic money tree is growing out of control, with both Boris Johnson and Jeremy Hunt pledging to spend tens of billions of pounds if they become prime minister. But any form of Brexit will mean less money than if we stay in the EU. Leave with no deal and out comes the axe.

Let’s quickly recap some of the spending promises each candidate has made. First, frontrunner Johnson.

  • Raising the threshold of the 40% income tax rate from earners on £50,000 to £80,000. This would cost £9 billion a year.
  • Lifting the national insurance contributions (NICs) threshold for those on low incomes. This would cost government at least £3 billion per year for every £1,000 the threshold is raised, according to the Institute for Fiscal Studies (IFS). Matching the current income tax threshold (£12,500) would cost £11 billion per year.
  • Abolishing stamp duty on homes under £500,000. That would deprive government coffers of £2.2 billion per year.
  • Increase per capita funding for school kids with a package worth £4.6 billion per year.
  • An extra 20,000 police on the streets – the hiring spree alone will cost £1 billion over three years.
  • Universal full-fibre broadband, which industry figures say could cost £30 billion.
  • A plan to “reboot” the Northern Powerhouse Rail project. Johnson says this idea needs to be “taken from the realm of generality and made particular”, but it is similar to another – perhaps more ambitious – policy which was costed at £100 billion.
  • Johnson ally Matt Hancock said the new prime minister would “show some love” for public sector workers. Johnson has only publicly committed to “decent pay”.

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Hunt is also racking up the spending promises.

  • Cut corporation tax to 12.5% and take 90% of high street businesses out of rates. His overall package of business tax cuts would cost around £13 billion per year in the short run. The IFS says this is “not a tax cut that would pay for itself”.
  • Raise NICs threshold (see above).
  • Double defence spending as a proportion of GDP (from 2% to 4%) over the next decade. At current levels, that would be another £40 billion a year.
  • Cut interest on student loans. This would cost about £1 billion per year in the long run. It will only affect the top 30% highest earners with student debt, says the IFS. Hunt also wants to cancel student debt for entrepreneurs.
  • £6 billion to mitigate the impact of a “no deal” Brexit on UK farmers and fisheries.

Both candidates say they’ll fund their bonanzas from the £22-25 billion of “fiscal headroom” that Philip Hammond has set aside in case we crash out. This is nonsense. The chancellor’s “war chest” is a one-off sum of money whereas most of Johnson’s and Hunt’s promises involving spending money year in, year out. 

What’s more, if we crash out of the EU with no deal – where both candidates are heading – our economy will suffer. It will up to 9% smaller than it otherwise would have been, costing £100 billion a year by the 2030s, according to the National Institute of Economic and Social Research.

The money needed for any new prime minister’s spending plans will be swallowed up by a Brexit black hole. We will have less money, not more. The only way to make sure we have the money we need to fix Britain is to stop fixating on Brexit and stay in the EU.

Edited by Hugo Dixon

8 Responses to “Johnson and Hunt’s magic money tree won’t survive Brexit axe”

  • Anyone with the slightest bit of intelligence can see these promises are pretty stupid. Where will the money come from when for ten long years we have suffered austerity and spending cuts? Austerity is not coming to an end and continues unabated. Hammond has now publicly declared that there is no pot of money and warned them to stop making stupid promises to win votes. Liddington has said similar.
    Both Johnson and Hunt are irresponsible and grovelling to the extreme right of their odious party. They will do anything to get into power.
    The various factions in the Remain side MUST come together into an alliance and start planning for either a second referendum or a GE now. Party political differences have to put to one side otherwise they are playing into the hands of both the extreme Tories and Farage’s motley mob of nutters.

  • That’s an interesting ‘Magic Money Tree’ picture at the top. Presumably it’s purely a coincidence that the most prominently identifiable coin (with the double-eagle) happens to be Russian?

  • “Anyone with the slightest bit of intelligence” ……

    Unfortunately 17.5 million obviously lack even this.

  • Why does anyone actually still believe Boris Johnson? After decades of falsehoods in the media and as a politician? Why does Hunt find it advisable to follow in Johnson’s footsteps? Because sufficient voters want it! That’s why.

  • And of course, Hunt plans to borrow more money to pay for his pie in the sky ideas. Given that Britain’s credit rating has taken a knock due to Brexit so far, someone really ought to tell him that borrowing has become more expensive. Refusing to pay the £39bn Britain owes to the EU will make Britain’s trustworthiness slide further affecting its credit rating even more negatively.

  • There are almost limitless amounts of dark money which could keep the economy afloat, as Britain becomes the HQ for international crime. Question becomes, how can ethical individuals can survive in a totally corrupt country, or will most of us eventually become tarnished.

  • At least the Philip Hammond has the honesty to call them out. A No Deal would need £90 billion to deal with the immediate crisis, which would leave no extra funds for tax cuts, extra spending promises from Messrs Johnson and Hunt.
    I hope that Hammond is also honest enough to help thwart any serious attempt either may make to take us to the No Deal abyss.

  • It is indeed extraordinary that even now, with a predominantly ‘remain’ Parliament and a ‘remain’ preferring country – there hasn’t been a single opinion poll in more than a year that has put ‘leave’ in front, with generally ‘remain’ in the mid-50% and ‘leave’ in the mid-40% – these two clowns are still pandering to Farage and the ERG in order to theoretically save their own seats in the future. Even the ‘Daily Mail’ published its own opinion poll last week with 54%-46% in favour of ‘remain’. It is more than just unfortunate that the Labour Party has been so feeble in its position under Corbyn – they should be absolutely outraged as Tom Watson has consistently stated, and demand a People’s Vote.