Economists rubbish Theresa May's claim that boosted NHS spending will be funded by a 'Brexit dividend'

REUTERS/Yves Herman

• Theresa May will announce her plans for an extra £20 billion a year for the NHS on Monday.
• The prime minister said this will be partly funded by a "Brexit dividend" - money Britain will supposedly save from no longer contributing to the European Union's budget.
• However, Paul Johnson, director of the Institute for Fiscal Studies, rubbished this claim over the weekend. 
• "There is literally, arithmetically, no money," Johnson said.
• May is under pressure to explain how the government intends to pay for increased NHS spending.

LONDON - Theresa May's claim that a "Brexit dividend" will fund increases in spending on the National Health Service has been rubbished by economists and senior Conservative colleagues.

The prime minister on Monday morning will outline her plan to provide the NHS with an additional £20 billion a year in real terms funding by 2024, which amounts to around £384 million a week.

May wrote in the Mail on Sunday that paying smaller contributions to the EU budget after Brexit would free up money to spend on the NHS, while Downing Street claimed on Twitter that the commitment would be funded by a "Brexit dividend."

Tory MP Sarah Wollaston, the chair of the Health & Social Care Committee, said the Brexit dividend claim was "tosh" which "treats the public as fools."

Paul Johnson,director of the Institute for Fiscal Studies, said the government's own predictions showed that Brexit would shrink the economy by £15 billion a year.

He added that the UK would continue contributing significant amounts to the EU budget until at least 2022 and would have to plug gaps in areas of UK funding which are currently covered by Brussels, an example being farming.

"There isn't a Brexit dividend," Johnson told the BBC on Sunday. 

There is literally, arithmetically, no money.

"If you look at the arrangement we've come to with the European Union in terms of paying our exit bill - and you add to that the commitment the Government's already made to keep funding farmers and so on - there is literally arithmetically no money.

"In addition, we know, because the Government has accepted this, that the public finances will be worse as a result of the Brexit vote.

"As a pure, sort of arithmetic point of view, over this period, there's no money.

"Actually the public finances will be £15 billion or so worse off, not better off, so there really just isn't money there for a Brexit dividend," he said.

May is under pressure to explain how her government will fund increased funding for the NHS.

The prime minister said over the weekend it'll come from the highly-contested "Brexit dividend" and hinted at increased borrowing and tax. However, she is yet to flesh out her policy with details. 

A number of national newspapers have used their front pages to criticise the policy. This includes publications which are usually supportive of the prime minister, with The Sun and The Telegraph arguing against significant tax rises.

May will explain the policy in a speech at a hospital in north London on Monday morning. 

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