Tory leadership: Jeremy Hunt sets 30 September 'no-deal deadline'


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Media captionJeremy Hunt: Who is the Conservative leadership contender?

Jeremy Hunt has said he will decide by the end of September whether there is a “realistic chance” of reaching a new Brexit deal with the EU.

The Tory leadership contender said he would deliver a provisional “no-deal Brexit budget” in early September and then give the EU three weeks.

He vowed to abandon talks after that if there was no “immediate prospect” of progress and move to a no-deal footing.

His rival Boris Johnson has vowed to leave “come what may” by 31 October.

The Conservative Party’s 160,000 members will begin voting next week and Theresa May’s successor is expected to be announced on 23 July.

If successful, Mr Hunt said he would “engage” with fellow EU leaders during August, and task a new negotiating team with producing an “alternative exit deal” – including ideas to solve the Irish border issue – to be published by the end of the month.

At the same time, he said preparations for no deal would continue in earnest, and all leave for civil servants at government departments would be cancelled unless he received guarantees that no-deal planning was “on time and on track”.

The foreign secretary also warned MPs against attempting to block a no-deal Brexit, warning it could make it harder to get a new agreement by giving the EU “misplaced confidence that we’ll give ground”.

He added that detailed preparation plans for no deal were needed to make it a “credible threat” to the EU, and give the UK “leverage” in the talks.

In a direct challenge to his leadership rival, he said the chances of a no-deal Brexit were “far from” the million to one odds recently quoted by Boris Johnson, and it would not possible to deliver it “on a wing and a prayer”.

‘No deal relief’

The UK is due to leave the EU on 31 October and a no-deal exit remains the default position in UK law after MPs rejected the agreement Theresa May agreed with Brussels three times.

If that does happen, the UK will automatically begin trading with the EU under the basic World Trade Organization (WTO) rules.

Under these rules, the tariffs – the taxes on imported and exported goods – will be different to what the UK currently trades under, which means the cost to farmers to export products could change or they could be affected by competition from abroad.

The National Farmers Union has said British farming will be “damaged” if that happens.

In a speech in London, Mr Hunt said a government led by him would cover the costs of the tariffs that would be imposed on the exports of the farming and fishing industries.

He promised to create a temporary “no deal relief programme” – designed to be similar to US President Donald Trump’s promise of £16bn for farmers affected by Chinese tariffs.

He also promised to set up a no-deal committee to make sure the government is ready to leave by 31 October, as well as a transport committee to keep goods moving through ports and airports.

“If you’re a sheep farmer in Shropshire or a fishermen in Peterhead I have a simple message for you,” Mr Hunt said.

“I will mitigate the impact of a no-deal Brexit on you and step in to help smooth those short-term difficulties.

“If we could do it for the bankers in the financial crisis, we can do it for our fisherman, farmers and small businesses now.”

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Media captionBoris Johnson: Who is the Conservative leadership contender?

Mr Johnson also promised to support the rural community after Brexit during a meeting with farmers in Cumbria last week, insisting farmers “should be assured that we will support the rural community, with price support, efficiency payments, whatever”.

Meanwhile, one of his leading backers, Health Secretary Matt Hancock, told the Times the days of public sector “pay freezes” under Theresa May and David Cameron would be over if Mr Johnson was elected.

Mr Hancock said: “People in the public sector need to be properly rewarded for the brilliant job they do.”

“Now that there’s money available, we need to show the public sector some love,” he added.

But during a campaign visit in Kent on Monday, Mr Johnson declined to make a concrete pledge on public sector pay, saying only that remuneration should be “decent”.

Magic money tree?

Analysis: Norman Smith, BBC assistant political editor

It does all raise the question – where on earth is the cash for all these pledges going to come from? Have Mr Johnson and Mr Hunt discovered the proverbial “magic money tree”?

No, instead they’re looking to dip into the chancellor’s back pocket.

Philip Hammond has suggested he has £26bn of what is called “headroom” in his current fiscal forecasts – basically, scope to borrow that much more – and Mr Johnson and Mr Hunt are saying they’d do just that.

To many Tories this sits at odds with the thrust of with Tory thinking.

The other thing which makes the spending pledges slightly more dubious is that Mr Hammond says, “Ok, I’ve got this headroom – but if we come out with no deal then all the money is going to have to be put into propping up the economy and getting us through that.”

Both leadership contenders have unveiled plans to cut taxes and spend more, designed to win support for their candidacies, but questions have been raised about how they would pay for the pledges.

Earlier in the campaign, Mr Johnson outlined plans to raise the threshold for the higher rate of income tax, predicting this would stimulate the economy, and increase government revenues.

He has said he would partially fund some of his plans from “fiscal headroom” carved out by current Chancellor Philip Hammond in his current spending plans.

This amount – estimated at £26.6bn at the spring statement – is an additional amount the UK could borrow without breaking self-imposed limits on government borrowing.

The figure is based on projections that assume the UK left the European Union with a deal, but Mr Hammond has warned that handling a no-deal exit would absorb that potential cash.

“Either we leave with no deal or we preserve our future fiscal space – we cannot do both”, he said last month, and on Monday, he reiterated that message.

Sources close to Mr Hunt have also suggested he would use this “headroom” to partially fund his pledge to boost defence spending by £15bn over the next five years.

But economist Paul Johnson, from think thank the Institute for Fiscal Studies, pointed out that the £26.6bn is “a one-year target so can’t fund permanent tax cuts/spending increases”.

Compare the candidates’ policies

Select a topic and a candidate to find out more






BREXIT


– Would leave the EU with no deal, but it’s not his preferred option.
– Wants changes to the Irish backstop and proposes sending a new negotiating team to Brussels.
– Wants to make changes to the withdrawal agreement and thinks it’s possible to get them done by 31 October, but has not ruled out an extension.


– Has pledged to get the UK out of the EU on 31 October, the deadline for Brexit set by the EU, but thinks the chances of a no-deal Brexit happening are a “million to one”.
– Would like to leave on the basis of a new withdrawal agreement negotiated with the EU, with the backstop removed and replaced with “alternative arrangements”.
– If this is not possible, he would ask the EU to agree to a “standstill period” during which the UK could negotiate a free trade deal with the bloc.
– Failing this, the UK must be prepared to leave on World Trade Organization (WTO) terms if required, and the country would “get ready for that outcome”.
– Says he would demonstrate “creative ambiguity” over when the UK will pay the £39bn “divorce” payment it is due to give the EU as part of the negotiated deal. He has also said the money should be retained until there is “greater clarity about the way forward”.

IMMIGRATION


– Calls for flexibility on immigration, saying skilled workers should be prioritised.
– Wants to review policies of stopping migrants with less than £30,000 coming to the UK to work.
– Would scrap the Conservative target of reducing net annual immigration to below 100,000 a year, he told the Daily Mail.


– Promises to deliver an Australian-style points-based immigration system, considering factors including whether an immigrant has a firm job offer before arrival and their ability to speak English.
– Opposes the net migration target of under 100,000 per year.
– Says he is “open to talent, open to immigration” but it “should be controlled”.
– Would block the ability to claim benefits immediately when someone arrives in the UK.

TAX


– As an entrepreneur, he wants to turn Britain into “the next Silicon Valley… a hub of innovation”.
– Pledges to slash business taxes to the lowest in Europe to attract firms to Britain after Brexit and reduce corporation tax to 12.5%.
– Wants to increase the threshold at which workers pay National Insurance to at least £12,000 a year.


– Pledges to cut income tax for people earning more than £50,000 by raising the 40% tax threshold to £80,000.
– Plans to pay for the reported £9.6bn annual cost of the cut in part from a pot set aside by the Treasury for a possible no-deal Brexit, and in part by increasing employee National Insurance payments.
– However he says his tax proposals will begin by “lifting thresholds for those on lowest pay”.

SPENDING


– Wants to boost defence spending by £15bn over the next five years.
– Promises to build 1.5m new homes for young people over the next 10 years.


– Pledges to “find the money” to recruit an extra 20,000 police officers over an as-yet unspecified period.
– Promises to speed up the delivery of “full fibre” internet connection, with the super-fast service available to all by 2025, eight years earlier than currently planned.
– Focus on Northern Powerhouse.
– Wants to review the HS2 train project.

HEALTH AND SOCIAL CARE


– Says there should be an automatic system for people to save for their social care costs in old age “in the same way they save for their pension”.
– Says people should be able to opt out of the scheme, and the government would cap costs for those who “save responsibly” during their lives.
– Mental health support to be offered in every school and a crackdown on social media companies that fail to regulate their content.


– Has previously said money spent on the EU could be put into the NHS.
– Says more should be spent on social care, according to a cross-party “national consensus”.
– Says the NHS would be “free to everybody at the point of use” under his premiership and has ruled out a pay-for-access NHS, even as a result of a post-Brexit trade deal with the US.

EDUCATION


– Says anyone who creates a new business which employs more than 10 people for five years would have their university tuition fee debts written off.
– He also plans a cut in interest rate paid on student loans.
– Long-term plan to provide more funding for the teaching profession in return for a guarantee that no one leaves the education system without a “rigorous qualification” sufficient to work up to at least the average salary.
– Wants to transform the education system to abolish illiteracy.


– Promises to raise spending on secondary school pupils to £5,000 each.
– Called the funding gap between some schools in cities compared with those in rural areas a “disturbing reality”.

Speaking on Sunday, Mr Johnson said he would be prepared to borrow more to finance “great objectives” in his spending plan, whilst keeping “fiscal responsibility”.

He told Sky News there was up to £25bn “available” in the short term, due to the improved state of the public finances, which “we intend to use” on education, policing and broadband rather than reducing the deficit.





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