Politics

How the NHS cash bung is being hijacked by Remainers

23 June 2018

9:00 AM

23 June 2018

9:00 AM

The cabinet’s trip to Chequers next month will be a tense affair. Things always are when Brexit is the only item on the agenda.

This week’s cabinet meeting, convened to discuss the new NHS funding settlement, offered a preview of some of the arguments to come. Greg Clark, the Business Secretary, and David Gauke, a Treasury man now installed as Lord Chancellor, argued that the public finances need a soft Brexit. Intriguingly, no one pushed back against that point.

In part, this was because Boris Johnson — the most bullish of the cabinet Brexiteers — was not there. One senior Downing Street source tells me that the silence of the other Brexiteers shows that, ‘Not many of the other leavers are as blasé as he is about disruption. They understand the fiscal arithmetic that if we take a hit to growth, it becomes very difficult to find more money for defence and everything else.’

Johnson is in combative mood, however. He believes there is an urgent need for a last-ditch effort to change the government’s whole approach to the negotiations. He has told friends that he fears that Britain is going to end up ‘not in Europe but run by Europe’.

The Foreign Secretary had hoped to enlist Michael Gove in this effort to push for a change of approach. Despite their spectacular falling out over the Tory leadership, the pair have — at times — coordinated on Brexit since Gove’s return to the cabinet. They met at a mutual friend’s London townhouse to discuss the issue at the beginning of this month. But the discussion ended up highlighting how far apart the two men are on tactics. Gove feels that a radically more robust negotiating strategy would require a credible threat of no deal. But he fears that this is effectively off the table because of a lack of preparation. So he reckons that the best thing now is to get out in March 2019 and then try to fix things. Boris thinks that the Brexiteers must launch one last effort to bend the government to their will.


Disappointed by Gove’s pessimism — or realism, according to taste — Johnson is forging a closer relationship with Brexit Secretary David Davis, who is also increasingly frustrated with the government’s approach. Johnson and Davis are sure to be the most volatile elements of the Chequers meeting, the purpose of which is to sign off on the white paper that will be Britain’s offer to the EU on the future relationship.

Allies of Davis expect him to have a freer hand on discussing Britain’s future relationship with Europe than he has on the withdrawal agreement. That’s because Olly Robbins — Theresa May’s lead civil servant on Brexit who has usurped much of Davis’s role as the chief negotiator — is focused so heavily on the withdrawal agreement.

But Johnson and Davis will be furious if they are told at Chequers that with negotiating time running short, the UK will have to make further concessions to make sure that the EU doesn’t reject Britain’s offer out of hand. It is worth remembering that the Brexiteers have already swallowed a stand-still transition, a £39 billion divorce bill and several other concessions to get the type of Brexit they wanted. If they are now told that those compromises weren’t enough, they’ll be angry.

Cabinet Brexiteers are concerned that even the 30 March date for leaving might be in danger. One tells me that the UK is ‘likely to face at some point soon a huge amount of pressure to extend Article 50’. That seems surprising: why would the EU want to do that? But this minister explains the EU’s aim would be to extend Article 50 further without guaranteeing the UK the transition phase the government so desperately wants. Brussels would then use this period to extract more concessions.

What’s certain is that the Brexit talks are behind schedule. One influential figure at the Department for Exiting the European Union admits that the UK is ‘not going to get much out of June’, a reference to the EU Council meeting at the end of this month. Even those in No. 10 normally optimistic about how the process is going now accept that the withdrawal agreement is unlikely to have been finalised by October.

One Davis ally tells me that talk about extending the withdrawal date deadline is ‘black ops by the EU’ and warns that any attempt to delay the UK’s departure would lead to the fall of the government. However, if the EU proposes a brief extension to Article 50, and threatens the transition process if the offer is turned down, the government’s failure to prepare for ‘no deal’ would make it very difficult for the UK to refuse.

All of this presages a dramatic autumn in British politics as Brexit combines with the spending review, which will determine how much money departments will have over the next few years. One imagines Philip Hammond will be quick to echo Clark and Gauke’s argument that the public finances need a soft Brexit. But even without this aggravating factor, the spending round is bound to be fractious. The size of the NHS increase means that things will have to be exceptionally tight everywhere else; the Treasury’s starting point is no more money, in real terms, for any other department. One ally of the Chancellor tells me that the Treasury will try to use the NHS settlement as a ‘baton to beat the other departments with’.

With money so tight, some Tories are — inevitably — eyeing up the foreign aid budget, now worth more than £13 billion. So it’s striking that Penny Mordaunt, the International Development Secretary, told cabinet this week that the 0.7 per cent target for aid spending is not sustainable in its current form. It is known that the UK is trying to get the definition of what counts as foreign aid changed and that Mordaunt wants the Treasury’s own accounting rules tweaked. Her comments, though, still took cabinet colleagues aback. But as one laments, it would take primary legislation to abandon the 0.7 per cent commitment.

At Chequers, the cabinet will be trying to find a position that minimises short-term economic disruption while still making Brexit worth doing. That won’t be easy. But it will be nothing like as hard as getting the EU to engage constructively on the whole question of the future relationship.

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