PHILIP HAMMOND today defied Brexit backers by saying he would refuse to set billions of pounds aside to prepare for Britain crashing out of the EU without a deal.
The Chancellor has faced calls to use spare cash from the Budget to prove that the UK is prepared for a no-deal Brexit.
Eurosceptic ministers argued that showing the EU we have billions of pounds to cope with short-term economic damage gives us a stronger hand in talks on a trade deal.
But Mr Hammond last night claimed it would not be “responsible” to spend extra money on preparing for no deal before it is necessary.
He wrote in The Times: “I need to ensure that we are prepared for all outcomes, including a no-deal scenario. The government and the Treasury are prepared.
“We are planning for every outcome and we will find any necessary funding and we will only spend it when it’s responsible to do so.”
Quizzed by MPs today, he said that £250million had been allocated to Government departments from the Treasury’s financial reserve – but repeated the claim that it would be foolish to spend more before he know the outcome of talks.
Mr Hammond told the Treasury Select Committee: “We do have planning for all scenarios, including for a no-deal scenario. We’ve already allocated £250million to departments from the reserve.
“What I’m not proposing to do is to allocate funds to departments in advance of the need to spend.
“Every pound we spend on contingent preparations for a hard customs border is a pound that we can’t spend on the NHS or social care or education or deficit reduction.
“We will not spend it earlier than necessary just to make some demonstration point.”
In a direct blast at his critics, the Chancellor added: "Some are urging me to spend money simply to send a message to the EU that we mean business. I think the EU knows we mean business."
In his article, the Chancellor also repeated David Davis’ claim that Brexit talks are “the most complex peacetime operation in our history”.
But he insisted this view is “realistic” in a jab at those who accuse him of being too pessimistic.
Mr Hammond concluded by calling on British and European negotiators to work quickly to secure a deal on the post-Brexit transition, and then move on to hammering out a future trade agreement.
His defiant message prompted instant anger from some Brexiteers – Ukip MEP Patrick O’Flynn called on him to quit this morning.
The article appeared to be a riposte to two Cabinet ministers who told The Sun this week that Mr Hammond should show the EU Britain is serious about preparing for no deal by putting billions aside.
One said: “It’s straightforward – Hammond simply has to show them the colour of our money in the Budget so they know we’re for real.”
Despite the Chancellor’s comments, Theresa May revealed more details of the Government’s planning for the possibility of no deal this week as she released two white papers on how Britain could cope with the loss of free access to EU markets.