DAGGERS DRAWN!

PM slaps treacherous Chancellor down as tensions between No.10 and No.11 reach breaking point

RELATIONS between Theresa May and Philip Hammond were plunged into the deep freeze last night. The Prime Minister dramatically slapped her Chancellor down after he undermined her Brexit strategy. Mr Hammond had said he was not ready to release the billions of pounds needed to prepare for leaving the EU without a deal. He also insisted any spending should be delayed until the last possible moment.

His stance contradicts Mrs May’s attempt to convince Brussels that Britain is ready to walk away if trade talks are dragged out. Mr Hammond also risked angering Eurosceptic MPs who have rallied round the Prime Minister after a difficult fortnight.

In the Commons Mrs May directly contradicted her Chancellor, saying:

‘Where money needs to be spent, it will be spent.’

The pair sat side by side on the front bench for the 45 minutes of Prime Minister’s Questions yesterday but barely exchanged a word.

Mrs May revealed the Government had signed off an extra £250million for Brexit preparations this year, including money for ‘no deal’ contingency plans.

And she said the Treasury would be writing to ministries to release further cash for measures such as border controls. The row, which sparked fresh talk that the Chancellor could be sacked in an autumn reshuffle, came as:

Treasury chief secretary Elizabeth Truss, who was a Remainer, said given the chance to vote again she would back Brexit because ‘dire predictions’ about it had proved wrong;

Mr Hammond warned all flights to Europe could be grounded if Britain left without a deal – a view not shared by the Department for Transport;

Senior ministers were reported to have clashed with him in Cabinet;

Labour warned it could vote down any ‘no deal’ agreement;

Berlin was reported to be insisting on a divorce settlement of up to £90billion;

A senior judge warned the European Court of Justice could strike down any EU-UK agreement.

Some Eurosceptic MPs last night called for Mr Hammond to resign because of his gloomy pronouncements on Brexit.

‘Large numbers of my colleagues are fed up with him now – it isn’t just the diehards,’ said one. ‘You cannot have a situation where the Chancellor is standing in the way of delivering the Government’s main priority. He has got to go.’

In an article in The Times, Mr Hammond had said: ‘We will find any necessary funding and we will only spend it when it’s responsible to do so.’ He later told MPs that officials needed to identify the ‘last point’ at which spending could begin ‘because every pound we spend on preparations for a hard customs border is a pound we can’t spend on the NHS, social care, education or deficit reduction’. The Chancellor gave another downbeat assessment of Brexit, telling the Commons Treasury committee it had placed a ‘cloud of uncertainty’ over the economy.

Bernard Jenkin, a prominent Eurosceptic, suggested it was the Chancellor who was undermining business confidence. ‘Some of the mixed messages coming out of the Cabinet are the source of the greatest uncertainty,’ he said.

A Cabinet source said Mr Hammond’s comments were ‘either deliberate and divisive or politically stupid’.

Mrs May told MPs her strong preference was to strike a trade deal that would benefit both the UK and EU. However Brussels is refusing to talk about trade unless Britain agrees a sum for separation payments. Ministers have abandoned hope of making progress ahead of next week’s summit of EU leaders in Brussels. They still hope the bloc will relent by Christmas.

But Mrs May made it clear that contingency planning is under way, releasing two white papers on how border controls would work in the event of a ‘no deal’ exit.

Charlie Elphicke, a member of the Treasury committee which took evidence from Mr Hammond yesterday, said: ‘It is vital to spend whatever money is needed to make sure we are ready for whatever outcome the negotiations produce. We cannot wait until the last moment to make sure we have resilient and strong borders.’