The UK will have to pay its Brexit “divorce bill” of up to £39bn even if no agreement is reached on a future trade deal with the EU, the head of Whitehall’s spending watchdog has said.

The head of the National Audit Office (NAO), Sir Amyas Morse, said on Tuesday that if parliament approves the withdrawal agreement in a vote in the autumn, it will become a legally binding treaty regardless of the success of separate trade talks.

His remarks are a blow for Theresa May, who has said she will not pay Brussels the money if it denies Britain a post-Brexit trade deal. The prime minister told the Commons in December that the cash offer was made “in the context of us agreeing the partnership for the future”. “If we don’t agree that partnership, then this offer is off the table,” she said.

The Brexit secretary, David Davis, has made similar assertions.

The chair of the Treasury committee, Nicky Morgan, asked Morse if he believed the payment was conditional on a trade deal. “No, that’s not my understanding,” he replied.

“As I understand this, the treaty, once approved, will pass into law in time for us to leave the EU, and then will become legally binding. Therefore the payments would fall to be paid no matter what, under international law,” he said.

“The payments are primarily in respect of continuing membership for the extension period. They don’t relate directly to whatever the future relationship may be.”

The apparent contradiction is explained by the fact that the UK is expected to sign two Brexit deals with the EU: a withdrawal agreement and then, after Brexit, a future trade agreement.

The withdrawal agreement will include a “political declaration” giving the outline of a future trade deal, which is why the government says it will have a trade agreement in the bag by the time it commits to paying the divorce bill.

It is possible, however, that trade talks could break down after Brexit, with the political declaration never morphing into a fully fledged trade treaty. In those circumstances, as Morse told MPs, the UK would still be obliged to pay the EU.

The size of the UK’s bill was not directly linked to the negotiations on its future relationship with the EU, he said.



The payment, estimated at between £35bn and £39bn, covers UK liabilities for ongoing EU projects up to the end of the bloc’s multi-year budget in 2020, and items such as pensions for EU staff, which could continue to be paid as late as 2064. The NAO said in a report last week that even relatively small changes could push the total beyond the £39 billion mark.

In a separate report published on Wednesday, parliament’s spending watchdog expressed grave concerns over preparations to leave the EU at the Department for Business, Energy & Industrial Strategy.

The department, headed by Greg Clark, is responsible for around a fifth of the work streams the government must complete as the UK leaves the EU.

MPs found it had not re-prioritised its overall work programme, had not begun

procurement for at least 12 essential IT systems and could not provide vital information about its workforce.

In unusually forthright language, the committee chair, Meg Hillier said BEIS appeared to be “operating in a parallel universe where urgency is an abstract concept”.

She said: “We have grave concerns about this apparent complacency, compounded by the lack of transparency on the department’s progress with what in some cases will be critical projects.”

The committee has given Clark a two-month deadline to confirm which programmes can be stopped, paused or slowed down to make way for Brexit priorities.

MPs said BEIS had made virtually no attempt to re-order existing priorities to free up time and staff for the complex job of ensuring a smooth Brexit.



The department was relying too heavily on the proposed 21-month transition period which would delay the introduction of new arrangements until 2021, said the report, which stressed that new systems may be needed as early as next March if talks fail.



A BEIS spokesman said: “Since this report was written, BEIS has received £185m of extra funding to help deliver a successful Brexit by employing an increased number of staff on our Europe work, identifying the most pressing legislative challenges and remaining ahead of schedule by recruiting high-calibre staff to ensure we prepare thoroughly and effectively.”