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14 March 2017

Theresa May has kept her biggest Brexit card in play – but she could still come a cropper

Financial contributions to the European Union work for the British economy. Passing them through Parliament will be tricky.

By Stephen Bush

One of the surreal things about the crisis that erupted after Philip Hammond’s budget is that the bone of contention is popular outside of Parliament. Polls consistently show that the increase in national insurance contributions is popular while the policy wonks say that it is progressive.

And yet it has damaged Hammond’s standing in the Conservative Party and the number of Tory MPs willing to defend the measure publicly is small.

That’s worth watching out for. One of the unnoticed balancing acts that Theresa May has pulled off is passing her Brexit bill through the Commons without answering tricky questions about how much money we will continue to pay into the European Union after we leave it and whether or not Britain will pay the €60bn “divorce bill” – the amount outstanding for programmes that the United Kingdom agreed to while still a member of the European Union but where the bill will come in after we leave.

May has a line that Brexit doesn’t mean paying “vast” sums into the European Union. What she hasn’t ruled out are continuing to make any payments into the European Union. And as she has made continuing to participate in European research and security projects, and as the United Kingdom is a net contributor to the European Union, you can see the beginnings of a deal that works for both sides.

The United Kingdom would pay less than its current overall contribution but more than its net contribution as an EU member, notionally to participate in the European Arrest Warrant and EU-wide research programmes, but in reality to secure an agreement on banking and rules of origin.  (It might also, as I wrote back in September, involve further payments to the poorer nations of the European Union under the table.)

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If we have control over our immigration policy, aren’t subject to the judgements of the European Court of Justice but we are paying, say £250m a week into the European Union to meet our existing liabilities and to participate in security and research programmes, that would broadly satisfy the majority of people who voted for Remain and Leave: control over British borders but not at a crippling price.

But here’s the thing: although Theresa May has been given the parliamentary authority to negotiate, she hasn’t been given the authority to authorise payments from the United Kingdom to the European Union or to the Eastern bloc. That would require another vote in the House of Commons and would be relitigated in the House of Commons with the passage of every new budget.

So the sound of silence about national insurance contributions may turn out to be the prelude to a very noisy row.