- Chancellor denies assertion Brexit would cut energy bills
- Says leaving would mean bigger budget deficit, higher taxes
U.K. Chancellor of the Exchequer George Osborne attacked claims that leaving the European Union would lead to cheaper energy bills as “fantasy economics,” saying taxes would rise instead.
"Leaving EU would lead to smaller economy, a hole in public finances plus higher taxes -- like higher VAT,” Osborne said on Twitter on Tuesday. He was responding to a declaration in the Sun newspaper by two fellow Conservatives -- former London Mayor Boris Johnson and Justice Secretary Michael Gove -- and Labour lawmaker Gisela Stuart, three of the leading campaigners for a so-called Brexit, that leaving the bloc would allow ministers to scrap value-added tax on gas and electricity.
The spat, one of many increasingly acrimonious exchanges between both camps as the June 23 referendum nears, brings the debate back to economics after Brexit campaigners attacked Prime Minister David Cameron’s record on curbing immigration over the weekend. The EU membership debate has split the Conservative Party in two, raising speculation a win for the “Leave” camp or a close vote may trigger a leadership challenge.
In the event of a vote to leave the bloc, Cameron and the head of the civil service, Jeremy Heywood, should both stay in their posts to ensure “stability” as the country negotiates the terms of an exit, the leader of the House of Commons, Chris Grayling, who supports a vote to leave, told reporters in London on Tuesday, seeking to downplay party divisions.
“The last thing we need is comprehensive team changes,” Grayling said. “I do not feel that I am part of a party that is about to rip itself to pieces.”
Grayling spoke after delivering a speech that warned the EU is heading toward a “political union” that will affect the U.K. “whether we like it or not.”
“If we vote to remain in the EU, then it would be EU rules that would determine our minimum wage, EU rules that would say how our pensions work, it would be EU rules to govern our skills system and even EU rules will tell us how health services should work,” he said. “It should be for us to control what happens to the National Health Service, to workers’ rights and to social protection and control over these areas should not lie with Brussels.”
Grayling was playing to the mantra of the Vote Leave campaign that Britain needs to “take back control” of its own affairs. Gove, Johnson and Stuart also spoke to that in their opinion piece in the Sun, saying abolishing energy taxes after a Brexit could save Britons 2 billion pounds ($2.9 billion) a year. EU rules prevent member states from cutting VAT below 5 percent.
“It isn’t right that unelected bureaucrats in Brussels impose taxes on the poorest while elected British politicians can do nothing about it,” they wrote.
Over the three-day holiday weekend, Tory rebels poured scorn on Cameron’s efforts to control the number of people arriving in the country, after official data showed the net migrant flow increased to 330,000 last year, compared with the “tens of thousands” the prime minister has targeted.
The immigration figures prompted questions about Cameron’s leadership over the weekend when Johnson and Gove said the premier’s broken promises were “corrosive of public trust” in a letter to the Sunday Times newspaper.
On Tuesday, Brexit supporters seized on a report from Migration Watch, a U.K. policy group that campaigns for more controls on immigration, saying as many as 480,000 refugees who have fled to Europe since the start of 2015 could head to Britain after 2020 if voters opt to stay in the EU.
“This report brings yet more evidence of the uncontrollable scale of immigration to this country,” said Cameron’s former work and pensions secretary, Iain Duncan Smith. “The ‘Remain’ campaign may try to tell you that immigration and the economy are separate, but the truth is that they are fundamentally linked. Immigration is an economic issue because it has had a big impact on people’s wages -- forcing them down.”
The Britain Stronger in Europe group described the Migration Watch numbers as “completely wrong.” As the “Leave” campaign zeroed in on immigration, Cameron’s side pushed the benefits of membership for small business.
Business Secretary Sajid Javid said that analysis by his department showed 1.2 million small- and medium-sized businesses in Britain rely on trade with firms in other EU countries. “If we leave the EU, small firms are on the front line and that’s a gamble with people’s livelihoods I’m not willing to take,” he said.
The economic argument for “Remain” was buoyed Tuesday by the support of 51 executives from European companies including Royal Dutch Shell Plc and Siemens AG.
“We believe the case for Europe working and staying together has never been stronger,” the business leaders, including Vodafone Group Plc Chief Executive Officer Vittorio Colao and Rolls-Royce Holdings Plc Chairman Ian Davis, said in a letter to the Financial Times.