Budget 2017: Philip Hammond announces extra £3bn for Brexit preparations over the next two years

Lizzy Buchan

Chancellor Philip Hammond has announced that an extra £3bn will be set aside for Brexit preparations over the next two years to allow for “every possible outcome”.

Mr Hammond kicked off the Budget with a major spending pledge for the EU withdrawal process, saying he “stands ready to allocate further sums if and when needed” to ensure the UK was ready for Brexit.

The pro-EU Chancellor has been a focal point for anger from his Brexiteer colleagues over his reluctance to spend millions of pounds preparing for the event that Britain walks away with no deal from the EU.

Speaking as he delivered his make-or-break Budget, Mr Hammond said: “While we work to achieve this deep and special partnership we are determined to make sure the country is prepared for every possible outcome.

“We have already invested almost £700m in Brexit preparations and today I am setting aside over the next two years another £3bn and I stand ready to allocate further sums if and when needed.

“No one should doubt our resolve.”

Brexit negotiations are approaching a “critical phase” and the best way to provide security for business and families was to make progress on trade talks, he said.

Treasury aides said the £3bn figure had emerged after requests from Whitehall departments for extra cash to cope with Brexit, including HM Revenue & Customs, the Home Office, Defra and the Department for Transport.

The Chancellor’s promise to spend billions preparing for Brexit will go down well with hardline Eurosceptics, who have been gunning for Mr Hammond over his reluctance to set aside cash in case Britain walks away from a bad deal.

However the move prompted fury from pro-EU MPs, who accused Mr Hammond of pouring money down a “Brexit black hole”.

Labour’s Chuka Umunna, a supporter of pro-EU group Open Britain, said: “There was no rabbit in the Chancellor’s hat, just a mounting Brexit squeeze which is leaving people poorer and starving our public services of much-needed funds.

“As the Brexit bad news mounts up, voters have every right to keep an open mind about whether leaving the EU is the best thing for our country.”

Liberal Democrat leader Vince Cable said the public would be angry that more cash was "disappearing down a Brexit black hole" when they were promised leaving the EU would benefit the economy.

He told a Westminster briefing: “It doesn't deal with the massive economic dislocation which of course is a multiple of many times that.

"It’s the physical infrastructure costs associated with a change in the regulatory regime so it's a tiny tiny fraction of the cost associated with Brexit but even the fact that they having to pay that amount up front on the possibility that we will crash out is itself revealing and I think actually politically very damaging."

Sir Vince added: "People outside just won't understand why we are spending so much money building lorry parks instead of investing it in the health service. If you talk about missteps, it's sending horribly the wrong message about what our priorities are."

It comes ahead of crunch talks in Brussels this week, where the UK Government hopes to persuade EU leaders to move on to post-Brexit trade discussions.