BRITAIN’S "divorce bill" from the European Union could cost as much as £50 billion, £10bn more than the UK Government has suggested, MPs have warned, while they suggest the promised "Brexit dividend" will take years to materialise.
The influential Commons Public Accounts Committee said there was a "risk" that the final financial settlement with Brussels could exceed the Treasury's "narrow" estimate of £35bn to £39bn.
It pointed out that the official figure failed to take account of at least £10bn in costs, which the Government would have to pay to the EU27 as part of the overall settlement, including nearly £3bn in contributions to the European Development Fund.
The committee warned that the so-called "Brexit dividend" - the money the UK will no longer have to pay into EU coffers once it has left - was "hard to calculate" and that Britain could still be making payments to Brussels for decades to come.
At the March Spring Statement, the Office for Budget Responsibility, the Government’s independent economic forecaster, estimated the final divorce bill would be £37bn and that Britain would continue paying off its financial settlement until 2064.
The Committee’s finding is potentially embarrassing for Theresa May, who has said the Brexit dividend will help fund her promised £20bn-a-year spending boost for the NHS.
In their report, MPs said the way the settlement was calculated meant some of the UK's liabilities would not be known until 2022 when the final tally would be made of Britain's budget contributions for 2014 to 2020, based on national income over that period.
While the Treasury estimated that 60 per cent of the settlement would be paid off by the end of 2021, the committee agreed with the OBR and said payments to meet Britain's estimated £8.6bn liability for its share of EU staff pensions and post-employment sickness benefits could run to "at least 2064".
"There is a risk,” explained the Committee, “that the amount the UK actually pays will fall outside the narrow range estimated by the Treasury of £35bn to £39bn.
"In making this estimate, the Treasury has undertaken limited analysis of the impact of changes to the assumptions on which the settlement estimate is based, considering the inherent uncertainty involved in forecasting future events."
It the noted: "There is much talk of an EU dividend but our work has highlighted a number of as yet uncertain costs. Any dividend will be hard to calculate and, if it materialises, is some years away."
The Committee said that if MPs were to have a so-called "meaningful vote" on the withdrawal agreement later in 2018, they would need an annual up-to-date estimate of the divorce bill from the Treasury as well as better information about the wider costs of leaving the EU.
Labour’s Meg Hillier, its Chairwoman, said: "The true cost of Brexit is a matter of outstanding public interest. Government must provide Parliament and the public with clear and unambiguous information.
"Government's narrow estimate of the so-called divorce bill does not meet this description. It omits at least £10bn of anticipated costs associated with EU withdrawal and remains subject to many uncertainties.
"Given these uncertainties, it is critical that Parliament and the taxpayer are kept informed as agreements are reached and new information becomes available. Government must explain how it will approach this task and waste no time in getting on with it," she added.
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