Chancellor adds extra £2bn public spending for Brexit

Sajid Javid has announced today extra cash for preparations ahead of the UK departure from the EU but raises fears over increased government borrowing

Chancellor of the Exchequer Sajid Javid is set to commit a further £2bn in public spending to fund Brexit preparations, but risks accusations of losing control of the public purse strings.

The Treasury announced last night that additional funding to help smooth the Brexit process spending in 2019-20 would be continued into 2020-21 ‘on projects linked to Brexit delivery’. It also confirmed that it had now committed £8.3bn for Brexit planning and delivery since the EU referendum in 2016.

In the spending review announced today, it was revealed that HMRC’s settlement will see it receive £382m for Brexit, to develop and deliver ‘improved critical internal systems, support businesses and taxpayers in all scenarios, develop long-term transit and infrastructure solutions and make further progress on alternative arrangements’.

The Spending Round also added there would be ‘continued funding to support HMRC’s ongoing transformation programme and deliver future additional sustainable efficiency savings. This will continue the successful rollout and operation of Making Tax Digital for VAT, increase the uptake of HMRC’s digital services, maintain HMRC’s IT infrastructure and consolidate the HMRC estate into 13 large, modern regional centres by 2023’.

HMRC will see its administration budget increase from £861m in 2019-20 to £877m in 2020-21, while the Treasury’s administration budget will rise from £186m to £200m in 2020-21.

The Department for Business, Energy & Industrial Strategy (BEIS) will see its resource budget increased from £2.2bn in 2019-20 to £2,5bn in 2020-21. This will include £28m to deliver compliance and enforcement activities against firms underpaying workers under National Minimum Wage and National Living Wage rules, support for small businesses to grow, including providing access to finance via the British Business Bank as well as support for delivering business stability for company law and audit after Brexit.

There will also be £8m funding for Companies House to deliver new policies relating to economic crime and anti-money laundering.

But the Institute for Fiscal Studies (IFS) has already warned that the government was ‘taking big spending decisions with little idea how sustainable they will prove’, while the National Institute of Economic and Social Research added that today’s spending round risks being a one year ‘re-election spending spree that does not address long-term economic challenges’.

Spending Round 2019 

​By Philip Smith

Philip Smith |Contributing editor, Accountancy Daily

Philip Smith is contributing editor at Accountancy Daily and a freelance journalist specialising in accountancy and tax matters. He ...

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