June 26, 2018 / 11:26 PM / 5 months ago

Britain is underestimating true size of EU divorce bill, say MPs

LONDON (Reuters) - The British government’s estimate of how much it will have to pay the European Union as part of its divorce settlement is at least 10 billion pounds too low, a committee of MPs said on Wednesday.

Anti-Brexit demonstrators waving EU and Union flags are reflected in a puddle in front of the Houses of Parliament in London, Britain, March 28, 2018. REUTERS/Toby Melville

Negotiators in London and Brussels have agreed on a divorce bill of 35 to 39 billion pounds, due to be paid over the next few decades after Britain leaves the bloc.

The bill was one of the most inflammatory elements of Britain’s withdrawal negotiations, with vocal Brexit campaigners in Prime Minister Theresa May’s party angry at having to pay anything at all. The agreement was seen as an achievement for May because it came in lower than some initially feared.

But parliament’s Public Accounts Committee said the figure, which estimated the cost to the country as a whole, was an underestimate of the actual cost to public finances and said the government needed to be clearer.

“The true cost of Brexit is a matter of outstanding public interest. Government must provide parliament and the public with clear and unambiguous information,” committee chairwoman Meg Hillier said.

“Government’s narrow estimate of the so-called divorce bill does not meet this description. It omits at least 10 billion of anticipated costs associated with EU withdrawal and remains subject to many uncertainties,” she added.

The report said it did not include 3 billion pounds of payments Britain would have to make to the European Development Fund, which the EU uses to provide overseas aid.

The finance ministry said May had been clear that Britain would honour commitments to the EU which were made while it was still a member of the bloc.

“We have negotiated a settlement that is fair to UK taxpayers and ensures we will not pay for any additional EU spending beyond what we signed up to as a member,” a Treasury spokesman said.

The committee also said the estimated overall settlement included around 7.2 billion pounds of EU funding which will go directly to private sector bodies and would therefore not offset the cost to government.

The original finance ministry estimate of the overall cost to the country did not distinguish between flows to private and public sector bodies, and simply deducted a combined amount from the cost.

The Treasury said: “The National Audit Office confirmed in April that our estimated figure is a reasonable calculation. Now we are discussing what our future relationship looks like.”

Reporting by William James; editing by Stephen Addison

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