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11 October 2016

The NHS budget slashed in half? Welcome to hard Brexit

Leaked documents show the impact of leaving the single market. 

By Julia Rampen

A hard Brexit could be the equivalent of slashing the NHS England budget by more than half, leaked government papers have revealed.

The Times reports it has seen drafts of documents for Cabinet ministers that warn the Treasury could lose up to £66bn a year in tax revenues. 

If the UK was forced to leave the EU’s single market, its gross domestic product could fall by as much as 9.5 per cent, the forecasts warned. As a result, the Government would be forced to make cuts or raise taxes. 

During the EU referendum campaign, Leave campaigners claimed voting out could mean an extra £350m for the NHS each week. The loss forecast by a hard Brexit would be equivalent to:

  • More than half the NHS England budget (£107bn in 2016/17)
  • Twice the annual transport budget (£29bn in 2016)
  • Half the education budget (£102bn in 2016)
  • Nearly one and a half times the defence budget (£46bn in 2016)

Nevertheless, the National Institute for Economic and Social Research warned before Brexit that cuts are most likely to fall on the working poor.

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The NIESR forecast was based on the behaviour of the previous government, led by David Cameron, which consistently slashed working-age benefits.

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The impact of cuts is likely to be exacerbated by inflation, the Resolution Foundation has warned.

Before Brexit, a low-paid couple with two children and one parent working part time was predicted to lose £150 between 2016 and 2020 because of tax credit cuts and the lack of a pay rise.

But the Resolution Foundation’s updated forecast predicts that the same family will now lose £760 because of even more sluggish wage growth, and inflation. 

Its senior economic analyst David Finch said: “The Autumn Statement will provide the first big policy test of helping ‘just managing families’ when the Chancellor sets out his welfare plans for the parliament. 

“The cuts to Universal Credit and freeze in working age benefits that he has inherited fall squarely on the shoulders of low-income working families, and higher inflation in the wake of the Brexit vote will make their bite even sharper.

“Changing course on these measures will send out a strong message that the government really is prioritising ‘just managing’ families.”

Speaking in the House of Commons on Monday, the minister for Brexit, David Davis criticised “misleading” comments about hard and soft Brexit: “We want the best possible access terms, full stop.”