The Treasury has allocated £250m from its reserve funds to support departments’ Brexit preparations.
Chancellor Philip Hammond revealed the figure to the Treasury Select Committee on Wednesday, adding that any additional money required to prepare for a "no deal" Brexit would also be funded from the Treasury reserves rather than departmental budgets.
Prime minister Theresa May later gave further details of new money which has been allocated to Brexit preparations, and said that departments will be given flexibility to spend this before relevant legislation has passed through parliament.
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Responding to a question from former work and pensions minister Iain Duncan Smith, May said: “The Treasury has committed over £250m of new money to departments like Defra, Home Office, HMRC and DfT in this financial year for Brexit preparations, and in some cases departments will need to spend money before relevant legislation has gone through the house.”
She added that the Treasury will “shortly” write to departments and the Public Accounts Committee to confirm how this will work.
Writing in The Times today, Hammond sought to re-assure critics that government is prepared for the eventuality that negotiations on exiting the EU end without a deal.
“The government and the Treasury are prepared. We are planning for every outcome and we will find any necessary funding and we will spend it only when it’s responsible to do so,” he wrote.
This was interpreted by some commentators as a refusal to budget for a no deal outcome, but Hammond told MPs it is normal practice to only allocate money when it becomes necessary to spend it.
“We have to be prepared for a no deal unless and until we have clear evidence that that is not where we will end up,” he told MPs.
“But, I am not proposing to allocate funds to departments in advance of the need to spend."
Instead, he said, the Treasury will “look in each area at the last point that spending can begin to ensure we are ready for a day one no deal scenario. That is when we should start spending hard-earned taxpayers money.
"Every pound we spend on contingency planning on a hard customs border is a pound we can't spend on the NHS, social care or education. I don't believe we should be in the business of making potentially nugatory expenditure until the very last moment when we need to do so."
"We will spend the money in a timely fashion to ensure we are ready but we will not spend it earlier than necessary just to make some demonstration point."
Pushed for timelines on this spending, he said: “There are some areas where we need to start spending money in the New Year if we can’t tell ourselves that we are moving steadily and pretty assuredly towards a transition.”
Hammond also confirmed that the Treasury is not proposing to re-open 2015 spending settlements in order to support departments preparing for a no-deal scenario, saying that any additional money required to plan for this would come from the Treasury reserves.