Andrew Green

Why Brexit wouldn’t leave voters out of pocket

Why Brexit wouldn't leave voters out of pocket
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The Treasury says that the cost of the UK leaving the EU would be £4,300 per household - but compared with what? We're not told. As a cross-bencher, I naturally take very seriously the task of checking and challenging the work of the government so I put down two Parliamentary questions which eventually elicited the response that: 'HM Treasury did not produce a forecast of how big the economy would be in 15 years’ time….'

Really? A whole report about the impact of Brexit by the year 2030, taking in hundreds of different factors - but no estimate about how big the economy would be by then? Why on earth not? The reason, it seems, is to avoid admitting that we'll all be far better-off by 2030.

It is extraordinary that the government should not wish the public to know what difference Brexit would actually make to their pockets as it is clearly a key consideration for voters. The issue, of course, is whether households will be better or worse off than they are today and, if so, by how much. So here is a quick calculation which any half-competent Treasury official could complete more quickly than he or she could drink a cup of coffee.

The Office for Budget Responsibility forecasts real GDP in 2030/2031 to be 43pc higher than in 2015/16: an increase of £774 billion in today's money. Alongside this, official projections from the Office of National Statistics forecast the number of households in the UK to increase by 3.75 million between 2015 and 2030, or 14pc.

Taking both into account, real GDP per household can be seen as forecast to increase by 26% over the next fifteen years, from £66,457 to £82,790. If, in the Treasury's central scenario, it were 3.8% lower with an EEA arrangement, that would still be an increase of over £14,000 compared to today. Even in the Treasury's worst-case scenario with a 6.2% 'loss' as a result of leaving the EU with a negotiated bilateral agreement, we would still see an increase in real terms of more than £12,000 in GDP per household compared to today.

Clearly, the government simply preferred to conceal what it must know - namely that, even on the Treasury's most pessimistic forecast, the UK economy would continue to grow outside the EU. Furthermore, by 2030 far from being £4,300 worse off than today in terms of GDP as they had implied, each household would - in real terms - be £12,000 better off than today.

While the government has chosen to lead on the measure of 'GDP per household', as has the IMF and the OECD, the Treasury Select Committee has quite correctly identified that this rather abstract measure might be misunderstood to be household income.

Of much more interest for ordinary people is what impact this would actually have on their wages. The TUC has calculated, on the basis of these same forecasts, that the average wage would rise from £492 a week to £672 if we left the EU, compared with £712 if we remained. Again, this shows that any suggestion that workers would be 'worse off' than today if the UK were to leave the EU is entirely misplaced.

This is what they were trying to conceal. The whole episode shows the government falling far short of the standard of frankness that we expect, referendum or not.

Lord Green of Deddington is a former British diplomat