Philip Hammond: Money will be spent on preparing for possible 'no deal' Brexit - but not now

  • Video report by ITV News Political Correspondent Carl Dinnen

Large amounts of money will be spent to prepare Britain for the possibility of "no deal" Brexit if necessary, Philip Hammond has said.

The Chancellor said he was "prepared to spend when we need to spend" - but warned now was not the time.

Questions over whether the UK should already be preparing itself for the eventuality have been circling in recent days.

On Wednesday, Mr Hammond said he would be willing to turn the tap for spending on if "no deal" was becoming a real possibility.

But he said such a move now would divert money away from the NHS, social care and education.

The Chancellor also urged the European Union to press ahead with thrashing out a Brexit deal in time for the official March 2019 exit date.

At Prime Minister's Questions, Theresa May revealed that £250 million had already been allocated for EU withdrawal preparations.

But Britain will need to spend more cash on infrastructure, such as lorry parks at Channel ports, if no deal is agreed.

In an interview with The Times, Mr Hammond said there was a "need for speed" from the other 27 EU nations in agreeing a transition.

This would deliver certainty for businesses and avoid wasteful government spending on contingency planning, he said.

Delays in beginning talks on the future UK/EU trading relationship - caused by Brussels' insistence that the divorce deal must be settled first - were creating a "cloud of uncertainty".

Theresa May said £250 million had been allocated to EU withdrawal. Credit: PA

Mrs May told the Commons that £250 million has already been committed from Treasury reserves for Brexit preparations by government departments including environment, transport, the Home Office and HM Revenue & Customs during this financial year.

"We are preparing for every eventuality, we are committing money to prepare for Brexit, including a no-deal scenario," she told MPs.

"Where money needs to be spent, it will be spent."

Mr Hammond said businesses needed certainty as soon as possible in order to make investment decisions and sign contracts covering periods after the official date of Brexit.

Early agreement would "avoid people having to make worst-case assumptions and acting on them in a way that would be damaging to their businesses, damaging to the UK economy, damaging to business partners in the other EU countries and damaging to the EU's economy as a whole", he said.