Philip Hammond has suggested it is “theoretically conceivable” flights could be grounded on the day the UK leaves the EU if no Brexit deal is reached.
The chancellor’s warning came as he risked escalating a row with eurosceptic Tories on Wednesday morning when he told the Commons Treasury committee he would not spend money planning for Brexit talks to fail until the last minute.
Hammond told MPs the Brexit talks were leaving a “cloud of uncertainty” over the economy and said the EU had to recognise the “need for speed” in agreeing to an implementation period.
“Some are urging me to spend money simply to send a message to the EU that we mean business. I think the EU knows that we mean business. They know we are planning for a no deal scenario,” he said.
“What I am not proposing to do to is to allocate funds to departments in advance of the need to spend. We should look in each area at the last point in which spending can begin to ensure we are ready on day one for a no deal scenario. That’s when we should start spending hard earned taxpayers money.
“Every pound we spend on contingent preparation for a hard customs border is a pound we can’t spend on the NHS, or social care, or education, or deficit reduction.”
According to the BBC, former Brexit minister David Jones has demanded Hammond spend “billions” soon on preparing for no deal.
Hammond said “Brexit can embrace a very wide range of outcomes” and that the government had to be ready.
“One can plan for the most extreme scenario. It is theoretically conceivable that in a no deal scenario there will be no air traffic moving between the UK and EU on the 29th March, 2019. But I don’t think anybody seriously believes that that is where we will get to.
He added: “There is are range of outcomes and what we will need to do at a point in time is determine what is a realistic worse case scenario we need to plan for to invest for.”
Shadow chancellor John McDonnell said Hammond’s committee appearance showed the “chaos” in government over Brexit.
Writing in The Times today, the chancellor said he would only spend money on preparing for a no deal Brexit “when it is responsible to do so”.
Hammond told the committee he was “surprised” that his comment had been interpreted as resistance to planning.
He revealed £250m had already been allocated to Whitehall departments to plan for Brexit.
His intervention came after Theresa May refused to say whether she would back Brexit if the referendum on quitting the EU was held now.