Divisions between May and Hammond laid bare over legacy spending plans

Government sources have told the Press Association that Mr Hammond is prepared to resign over Mrs May’s spending intentions, after tensions between Treasury and Number 10 officials reached boiling point.

Downing Street said it had been “quite hard” keeping up with anonymous quotes from friends of the Chancellor recently, and that Mr Hammond had offered his views “across a wide range of topics” during Tuesday morning’s Cabinet.

However Number 10 insisted Mrs May’s future spending plans did not come up at the meeting, and that the whole Cabinet had supported recent legacy announcements.

The Prime Minister’s official spokesman told a Westminster briefing: “It’s been quite hard keeping up with all the anonymous quotes from friends of the Chancellor in recent days.

“But I would simply say he was in Cabinet this morning and offering his views across a wide range of topics.”

Mr Hammond is understood to be so against the plans that he is prepared to quit the Government in what would be an extraordinary move just weeks before the PM leaves office.

Tensions have surfaced over Mrs May’s intention to spend up to £9 billion per year over three years on education, totalling £27 billion, including plans to build new schools and pay teachers higher wages, the senior source said.

The Chancellor is thought to be particularly angry that the plans could tie the hands of her successor, which the source said was “immoral” and “irresponsible”.

“Everyone knows this Government is coming to an end and ministers are desperately trying to shore up their legacy by splashing the cash,” they told the Press Association.

“Not only is it immoral to take away the choices of the next PM, it’s irresponsible – especially as no-deal looms.

“There are times it’s reached boiling point with the Chancellor prepared to just walk away.

“No-one’s denying there are some spending pressures but these are decisions to be taken by a successor in the round – not wasted on frivolous vanity projects or an attempt to bind the hands of the next person by making three-year pledges on their behalf.”

A source close to Mr Hammond added: “The Chancellor is 100% dedicated to getting on with the day job – promoting economic stability and ensuring prudent public finances.

“He has overseen great success with rising employment and wages and wants to see this continue.”

Shadow chancellor John McDonnell said it was “another example of how far the Tories are cut off from the real world” and called on Mr Hammond to resign over his austerity policies.

“Instead of resigning because of May’s attempt to spend more on education, Hammond should resign because his austerity policies have resulted in the suffering of hungry children in class,” he tweeted.

Number 10 is understood to be asking Mr Hammond to free up money from the £26.6 billion “war chest” he set aside in case of a no-deal Brexit to fund the plans.

In the Spring Statement in March Mr Hammond said he would decide in the Spending Review how to share the proceeds from any Brexit “deal dividend” – if an agreement passed the House of Commons.

A Downing Street source said: “It is a fact though that school funding in England is at its highest ever level – rising from almost £41 billion in 2017-18 to £43.5 billion by 2019-20.

“But while there’s more money going into our schools than ever before, we know they face budgeting challenges.

“The Education Secretary has been clear he will back head teachers to have the resources they need to deliver a world class education.”

Mrs May’s tenure in Number 10 will end next month, and she has already sought to define her legacy with pledges to tackle climate change, mental health and modern slavery.

On Monday she set out plans for new teachers to receive training on how to spot the signs of mental health problems in youngsters, under a plan to overhaul society’s approach to the issue.