01/07/2019 14:11 BST | Updated 01/07/2019 14:39 BST

Chancellor Warns Johnson and Hunt: There Is No Spare Cash In A No-Deal Brexit Scenario

Both Tory leadership contenders have made eye-catching spending pledges worth billions of pounds.

Boris Johnson and Jeremy Hunt have been warned by Chancellor Philip Hammond that they will not have the money to fund their spending pledges if they push through a no-deal Brexit.

Both Tory leadership contenders have made eye-catching spending pledges of billions of pounds in an effort to win the race to become prime minister, with Johnson highlighting the £25bn of “headroom” built up by the Treasury in case of no deal.

And while Johnson has taken a more hardline approach on Brexit, both contenders have made clear they are willing to take the UK out of the EU by the October 31 deadline if Brussels refuses to budge in negotiations.

But Hammond warned that the “fiscal firepower” he has been keeping in reserve until Brexit is resolved will be needed to “plug the hole” in the nation’s finances if the UK leaves the EU without a deal on Halloween.

Johnson has signalled a raft of spending pledges throughout the campaign, including a tax cut for earners on more than £50,000 and suggesting he would borrow more to fund infrastructure projects like rail and road investment.

However, on Monday he failed to commit to boosting pay in the public sector despite his cabinet backer Matt Hancock telling the Times that Johnson would show workers “some love”.

Pressed several times on Hancock’s comments, he declined to make a concrete pledge.

Speaking during a visit to a Kent garden centre, Johnson said: “I certainly think that you need to have decent pay in the public sector.”

Hunt meanwhile has pledged cuts to corporation tax at an estimated cost of £13bn per year in the short term and an increase in defence spending to cost an additional £15bn in four years, while acknowledging he may have to delay some of the commitments in the event of no deal.

Hunt meanwhile insisted voters do not want a “showman” prime minister as he set a deadline of September 30 to decide whether to push through a no-deal Brexit a month later.

The foreign secretary insisted voters “don’t want to be entertained” at a time of crisis, in a clear swipe at Johnson at the beginning of a key week in the leadership contest, with the 160,000 Tory members who will decide the next PM preparing to receive their ballot papers at the weekend.

Setting out a 10-point plan for Brexit, Hunt said he would come up with a new strategy by the end of August before allowing MPs to vote on in at the start of the new parliamentary term in early September.

He will then enter negotiations with the EU for three weeks before deciding on September 30 whether an improved deal is possible or whether to plough ahead with a no-deal Brexit on October 31.

“I want to be crystal clear with members of the Conservative party, with my parliamentary colleagues and with the European Union,” he told the Policy Exchange think-tank on Monday.

“If there is no engagement on this deal, if it’s apparent that the (European) Commission is simply not interested in negotiating, if there is no willingness to tackle the shortcomings of the backstop, and if there is no immediate prospect of a deal that can get through parliament, then there will be no kicking the can down the road and we will intensify and finalise our plans to leave without a deal.

“So from the start of my premiership I will work on the basis that we are leaving on October 31 without without a deal unless the commission changes its position.”

Hunt was toughening up his Brexit position in an attempt to make up ground on Johnson, the overwhelming favourite to win the Leave-leaning Tory members’ vote.

He insisted his plan would make no deal a “credible threat” and force the EU to renegotiate the current withdrawal a deal, insisting “belief alone won’t cut it, rhetoric isn’t enough”.

“This is about hard graft, focus and attention to detail,” Hunt said.

Answering reporters’ questions he also dismissed suggestions that a lack of charisma compared to Johnson was harming his chances of success.

“When I talk to people running their own businesses, to farmers, to shopkeepers, to people on the high street who are worried about the situation that we’re in now, they don’t want  showman, they don’t want to be entertained, they want a prime minister who is going to lead,” Hunt said.

Responding to Hunt’s Brexit plans, Liberal Democrat leadership candidate Ed Davey MP said: “It is utterly shameful that Hunt and his opponent are continuing this no-deal brinkmanship. Hunt has already admitted he would be happy to sink businesses and see people lose their jobs in order to make the Conservative party membership happy.

“We have just months to save our country from this madness. Under my leadership, the Liberal Democrats will do everything in our power to prevent no-deal, and work with others across parliament to stop Brexit.

“Both Hunt and Johnson only care about one job, becoming prime minister, not the millions of jobs that are threatened by no-deal.”

SNP economy spokesperson Kirsty Blackman MP said: “The two men vying to be prime minister are locked in a no-deal Brexit bidding war to try and win over the Tory faithful – and it is ordinary people who are set to pay the price.

“Boris Johnson and Jeremy Hunt have become the Thelma and Louise of Brexit – it beggars belief that both are prepared to drive the UK economy off a Brexit cliff-edge, regardless of the catastrophic consequences for the economy and people’s jobs.”